Lange says the revival of large-company growth stocks could last for several years. By Anne Kates Smith, Executive Editor January 28, 2008 Harry Lange has run Fidelity Magellan since 2005. The storied $45-billion mutual fund just reopened to new investors.Last year, the market finally favored companies with fast-growing earnings over those selling at bargain prices. Will growth stocks lead for a while now? Growth stocks have had a tough time since 2000 in spite of a lot of good earnings growth, but I think they look attractive over the next few years. These cycles typically last four years or more, and the valuations of growth stocks versus value stocks certainly didn't catch up in just one year. RELATED LINKS Should You Invest in Fidelity Magellan? Bargains in a Wild Market Large-company stocks are also finally starting to gain after several years of strong small-cap-stock perform-ance. In a weaker U.S. economy, large companies often have more international exposure, cushioning the U.S. weakness. What's your take on foreign stocks? Domestic versus international stocks is a tougher call. Foreign stocks have had a good run, but overseas economies also still look stronger than that of the U.S. So for now, I'm maintaining a significant foreign-stock exposure. Advertisement What do you look for in a company? I want to see a competitive edge and a management strategy that will lead to above-average earnings growth for a few years ahead. I choose stocks strictly on their own merits, but I do adjust the size of my holdings based on my view of the economy and stock-market valuations. You beat the market by 13 points last year. How did you do it? And where do you see opportunities now? Recent sector-weighting increases in gold and oil stocks helped. Last year's performance was led by Nokia, still a top holding, as it benefited from market-share gains in a robust cell-phone market. I did add a small amount to beaten-down financials in 2007. I will keep a very close eye on the sector in 2008, as our research staff looks for strong financial companies that have been unfairly beaten down. How do you decide when to sell? I generally sell when earnings growth slows down. I occasionally sell when price-earnings ratios become extremely stretched. In 2007, I cut back on some materials and infrastructure stocks when it appeared earnings growth would slow. I also sold some Chinese stocks after they'd risen 500% or more.