The manager of Fidelity Contrafund, a member of the Kiplinger 25, tells where he sees the best opportunities. By Andrew Tanzer, Senior Associate Editor March 31, 2011 Many fund managers seem to make a splash in one market cycle and then sink beneath the waves. And then there is the incomparable Will Danoff, manager of Fidelity Contrafund (symbol FCNTX), a member of the Kiplinger 25. Over the past year through February 11, Contra returned 27.6%, beating Standard & Poor's 500-stock index by two percentage points. Since Danoff took the fund's reins in September 1990, it has returned an annualized 13.3%. We recently caught up with the maestro to learn where he is finding the best investing opportunities. What follows is an edited version of our conversation.Kiplinger's: What's your take on the economy? Danoff: U.S. companies have cut costs well and remained disciplined in capital spending and inventory control since the economy collapsed in 2008 and 2009. That discipline, coupled with growth in emerging markets and stabilization of the U.S. economy, has fueled growth, particularly in the export sector. Americans in the lower and middle part of the economic spectrum are still concerned about their jobs, and their houses are underwater. We'll eventually see better job numbers, but overall the consumer is still not a particularly strong part of this economy. What do you look for in a stock? I'm interested in finding multiyear growth stories, companies that can gain market share over time and that are positioned in front of a megatrend. I like companies that can triple earnings over five years and that have above-average returns on investment. I prefer great businesses, but I also look at lesser companies run by exceptional businesspeople. Advertisement You have nearly one-third of Contra's portfolio in tech stocks. Why such a large bet? My strategy has been to own technology as a play on a recovering economy. More than half of all capital spending is now IT-related. Companies have cleaned up their balance sheets and reduced capital spending, but they continue to buy more computers and other technology. One of the biggest trends right now is the emergence of smart phones. It's not new, but it's relatively early in the product cycle. Apple (AAPL) has been well positioned for that trend. [Apple and other stocks mentioned in this interview were among Contrafund's largest holdings as of December 31.] Are you in front of any other megatrends? The growth of emerging markets is a continuing megatrend. The ability to execute in emerging markets is important for global brands. For instance, Americans consume 400 eight-ounce servings of Coca-Cola (KO) beverages a year. Mexicans drink 650 to 700 servings a year, but annual per-capita consumption in China is only 25 eight-ounce servings. Coke is betting that it will be able to increase per-capita consumption in China profitably. I'm interested in companies that can sell products -- whether branded goods or technology -- to billions of people in Asia and other emerging markets. Nike (NKE) fits this theme. McDonald's (MCD) and Coke are also doing a nice job in emerging markets. In general, where do you see the best value in the market? At the margins, I'm finding better opportunities in bigger names. Some of the large, blue-chip companies are cheap relative to where they've been in the past 15 years, and their businesses are getting better. They have a weaker dollar on their side, strong profit margins and free cash flows, dominant positions, and the necessary human resources to execute and grow in emerging markets.