Fidelity Outlook 2026: These are the quality stocks in uncertain times

• Fidelity recommends companies with strong brands and stable earnings for 2026
• Recurring sales through subscription models are considered a quality feature
• Periods of increased volatility can provide buying opportunities

What distinguishes quality stocks

In an outlook published on November 26, 2025, Fidelity explains why high-quality companies can be particularly attractive in uncertain times. Although the fundamental prospects for 2026 are positive, there are considerable risks – from trade conflicts to geopolitical tensions to high global debt. In this environment, companies with strong competitive advantages, pricing power and established brands may be best positioned to deal with the unknown, said Sonu Kalra, manager of Fidelity Blue Chip Growth Fund.

There is no uniform definition of quality, but Fidelity fund managers cite several characteristics. Sammy Simnegar, manager of the Fidelity Magellan Fund, pays attention to three factors: strong brands, high barriers to entry and first-class management. However, the best indicator is the predictability of profits. Companies with recurring revenue – for example through subscription models – performed particularly well here. Simnegar compares such business models to a toll booth that generates a steady stream of income regardless of the market situation.

Examples from different industries

As the Fidelity article shows, the fund managers find quality companies in different sectors. One example is CostCo: The retailer generates around two thirds of its profits from membership fees and operates with such low margins that competitors are pushed out. Another example is Verisk Analytics, a provider of analysis and risk assessment software for the insurance industry, which generates more than 80 percent of its revenue from subscriptions.

In the technology sector, the boundaries between classic blue-chip stocks and growth stocks have become blurred. Companies like NVIDIA, Alphabet and Meta have become the fastest growing companies on the market and at the same time have high margins and dominant market positions. Jason Weiner, co-manager of Fidelity Contrafund, defines quality as companies whose products or services are so essential that customers would be very unhappy if they disappeared. These companies benefit from the so-called flywheel effect: the larger they become, the more their growth accelerates because each additional customer makes the offer more attractive, generates more data or revenue and thus enables new investments in better products – which in turn attracts even more customers.

What distinguishes quality stocks

The concept of quality stocks is also anchored in factor investing. As Invesco explains in an analysis of the quality factor, this approach focuses on companies with high profitability, low debt and stable earnings – characteristics that are more resilient during periods of economic stress or rising inflation. Historically, the S&P 500 Quality Index has performed better than the broader market in falling markets, while lagging slightly behind in sharply rising phases. However, this approach has typically outperformed over the entire market cycle.

For investors, periods of increased volatility could provide opportunities to purchase quality stocks at cheaper prices. As Kalra emphasizes in the Fidelity outlook, a long investment horizon is crucial: if you find companies with long-term growth potential, you can let time and compound interest do the work.

D. Maier / editorial team finanzen.net

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