10 Value Stocks to Make Money in 2011

BOSTON (TheStreet) -- As investment strategists are predicting a range-bound equities market this summer, going on a quest for value may pay off. Beaten-down stocks have the potential for price appreciation while at the same time producing higher-than-average yields.

That narrows the field to a handful of large-cap stocks, but intrepid investors may also find mid-cap and small-cap shares that are diamonds in the rough.

Indeed, small-cap value funds are finding it tough to find cheap stocks after two bull-market years, as indicated by the high cash positions in their portfolios. For example, the Pinnacle Value Fund(PVFIX), which gets a top five-star rating from Morningstar, was holding 53% cash at the end of the first quarter, which, it turns out, is surprisingly common for small-cap funds now.

Todd Rosenbluth, the mutual-fund industry analyst at ratings firm Standard & Poor's, told TheStreet that given the market's recent volatility, large-cap value stocks look appealing since they can offer downside protection as well as room for capital appreciation when the market recovers. Plus, they're less volatile. Growth stocks, on the other hand, are more closely tied to the fortunes of a robust economy.

Over the past four weeks, the S&P 500 Index is down 2.7%, with every industry sector showing a loss, ranging from real estate's 0.7% dip to technology's 4.7% drop.

Sectors that have held up best over the current quarter through June 20 are health care, up 6.2%; consumer staples, up 4.9%; and utilities, up 4.2%.

In health care, drugmaker Pfizer(PFE) is one of the most popular holdings of many large-cap value funds. It is the largest holding at the $171 million PNC Large Cap Value Fund(PLVAX), at 5% of the portfolio, and at the $478 million Fidelity Blue Chip Value Fund(FBCVX), at 5.3%.

The $718 million Legg Mason ClearBridge Large Cap Value Fund(SINAX), which gets a five-star rating from Standard & Poor's, favors consumer-staples stocks, including cigarette maker Philip Morris International(PM) and household- and personal-products company Kimberly-Clark(KMB), both of which are in its top four holdings.

Here are 10 stocks that are currently the biggest positions of top-rated value-oriented mutual funds: