Fidelity Funds to Buy Before Economy Grows

These three Fidelity mutual funds returned 14% last month by investing in chemical and mining companies.
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TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

Almost a third of stock

mutual funds

run by

Fidelity Investments

returned more than 10% last month, when the

S&P 500 Index

climbed 8.5%.

Among those 63

mutual funds

, three that invest in chemical and technology companies might be worth buying before the economy rebounds. The funds -- Fidelity's Select Chemicals Portfolio, Select Materials Portfolio and Advisor Technology Fund -- each returned about 14% last month.

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Chemical stocks are likely to gain as the recession lifts because manufacturers need them for their products. Technology shares will rise when companies start upgrading their computer systems and consumers can afford to buy electronic devices again.

The

Fidelity Select Chemicals Portfolio's

(FSCHX) - Get Report

top two holdings are

Monsanto

(MON)

and

Praxair

(PX)

. The stocks have returned 12% and 13% this year, respectively, doubling the 5.4 rise of the S&P 500 Chemicals Index.

Chemical companies make up more than half of the

Fidelity Select Materials Portfolio

(FSDPX) - Get Report

. The fund holds some of the same stocks as the chemicals fund, but offers exposure to metals through

Newmont Mining

(NEM) - Get Report

and

Freeport-McMoRan

(FCX) - Get Report

. Freeport-McMoRan jumped 25% in March on optimism about

copper demand

.

The

Fidelity Advisor Technology Fund

(FATEX) - Get Report

invests heavily in

Hewlett-Packard

(HPQ) - Get Report

and

Cisco Systems

(CSCO) - Get Report

, companies that have been named as potential suitors for

Sun Microsystems

(JAVA)

now that talks with

IBM

(IBM) - Get Report

have broken down. The U.S. General Services Administration has named Hewlett-Packard the centralized buyer for information technology products and services, giving it the inside track to bid on $50 billion in projects.

These funds ranked among the top third of "hold"-rated funds at the end of February. They could be upgraded to "buy" in light of their March performances.

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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.