10 Top Value Stocks With Gains Up to 48% in 2012 (Update1)

(Story updated to note that Sterne Agee downgraded Dell shares to "underperform" from "neutral" due to its share-price run-up and competitive pressures.)

BOSTON ( TheStreet) -- It's a topsy-turvy time for value- and growth-oriented investors.

Stocks in the S&P 500 Value Index have gained almost 23% this year, while the S&P 500 Growth Index has lost a startling 6% this year. The primary benchmark index, the S&P 500, is up 7.5% this year.

Over the past year, value stocks -- which are seen as inexpensive based on fundamental measures such as cash flow or price-to-earnings ratios -- and growth stocks -- which have above-average revenue or profit growth -- had moved in tandem, putting in a losing performance in the low single digits. Investors eschewed all kinds of risks.

But this year, the financial sector, which now has most of its members in the S&P 500 Value Index, is pulling up the whole value category. Financials, which have been soundly thumped over the past three years, hence their relative cheapness, are up 11.1% this year, including 10% in the past 13 weeks. That's second only to the information-technology sector's 12% advance in 2012.

Value investors believe that bank and investment house fundamentals indicate they are undervalued and poised to rebound in anticipation of Europe successfully resolving its sovereign credit woes and because the U.S. will post faster economic growth this year, although not at the rapid pace that favors growth stocks and makes their higher price-to-earnings multiples worth the price.

Here are 10 of the top performers in the S&P 500 Value Index this year in inverse order of share-price performance:

10. Applied Materials ( AMAT)

Company profile: Applied Materials is the world's largest supplier of semiconductor-manufacturing equipment to the highly cyclical semiconductor industry. Late last year it bought Varian Semiconductor Equipment for $4.6 billion in cash, giving it an immediate market-leading presence in the field of ion implantation.

Investor takeaway: Its shares are up 21% this year, including 12% in the past month, but on a 12-month basis, they're down 17%.

9. Dell ( DELL)

Company profile: Dell is a manufacturer and direct seller of notebook computers, desktop computers, software and other peripheral equipment. It's also building a retail store presence.

Investor takeaway: Its shares are up 21% this year and have a three-year annualized return of 25%. S&P gives Dell a "strong buy" recommendation with five stars, its highest rating, and a $19 price target, a 7% premium to its current price.

Sterne Agee downgraded Dell to "underperform," from "neutral" Wednesday, due to its shares potential downside risk after its strong run-up this year and increasing competitive pressures in its core PC business.

8. EMC Corp. ( EMC)

Company profile: EMC is a leading provider of hardware, software, and services for enterprise network storage, and now, through its VMware unit, software and services. The company is well-positioned to become a major player in cloud computing and virtualization software.

Investor takeaway: EMC's shares are up 22% this year and have a three-year annualized return of 30%. S&P lowered its rating on its shares to "buy" from "strong buy," on Jan. 26, based on valuation as the share price is approaching the firm's price target of $28. S&P's survey of analysts found 21 "buy" ratings, 13 "buy/holds," and four "holds."

7. Freeport-McMoRan Copper & Gold ( FCX)

Company profile: Freeport-McMoRan's mines produce more copper and molybdenum than any other company in the world. It also produces gold. The company reported 2011 earnings of $4.6 billion, a record.

Investor takeaway: Its shares are up 22% and have a three-year annualized return of 46%. Metals mining has historically been a highly volatile industry, but demand has steadily risen over the past few years. S&P has its shares rated "hold," while in its survey of analysts, it found 11 "buys," nine "buy/holds," and five "holds."

6. Citigroup ( C )

Company profile: Citigroup is a global financial-services company that was bailed out by the government in the financial crisis of 2008. It is recovering, and thanks to the geographic diversity of its operations, Morningstar says "Citigroup is poised to continue adding high-margin loans to its balance sheet while many of its peers in the U.S. and Europe suffer from low interest rates and minimal loan demand in deleveraging developed economies."

Investor takeaway: Citigroup's shares are up 25% and have a three-year average annual loss of 3%. S&P has its shares rated "hold," and found in a survey of analysts that 11 give it "buy" ratings, and there are seven "buy/holds," five "holds," two "weak/holds," and one "sell."

5. Caterpillar ( CAT)

Company profile: Caterpillar is the world's largest maker of heavy construction equipment, including bulldozers, excavators, and loaders. It also produces engines for its own off-highway vehicles and others' machines.

Investor takeaway: Its shares are up 26% this year and have a three-year annualized return of 56%.

Cat's top markets, especially mining, are booming internationally, particularly in Asia, and its strong brand name usually makes it a top choice. When construction picks up domestically, it will do even better.

S&P has it rated "buy," while other analysts give its shares eight "buy" ratings, eight "buy/holds," and eight "holds." Those same analysts expect it to earn $9.65 per share this year and that that will rise by 16% to $11.19 per share in 2013.

4. Goldman Sachs ( GS)

Company profile: Goldman Sachs is a global investment banking firm, with a focus on institutional client services, lending and investment management. Revenue fell 26% last year, reflecting investors' risk-averse style, which resulted in weaker demand for trading, underwriting and advisory services.

Investor takeaway: Its shares are up 27%, but over the past 12 months have lost 31%. S&P has its shares rated "hold" because, at $114, they exceed its $110 price target.

Analysts' consensus estimate is for earnings of $12.05 per share this year, and growing by 9% in 2013. S&P found seven "buy" ratings, five "buy/holds," 14 "holds," and one "weak/hold," in its survey of analysts.

3. Morgan Stanley ( MS)

Company profile: Morgan Stanley is a global investment bank that earns half of its revenue outside North America. Morningstar says the company's "current business model is one of the least impacted by regulatory reforms, and that its breadth of revenue lines, their corresponding earning power, and restructuring efforts should allow the firm to thrive."

Investor takeaway: Its shares are up 30% this year, including 18% in the past month, but have a 12-month loss of 35%.

S&P has its shares rated "hold," and says that "despite growth in client services, we see 2012 total revenue 10% lower from weaker principal trading and transactions," and, as a result, cut its 2012 earnings estimate to $1.90 per share from $2.16, and set its 2013 outlook at $2.25 per share.

A survey of analysts by S&P fund eight "buy" ratings, three "buy/holds," 14 "holds," and two "weak/hold" ratings.

2. Marathon Petroleum ( MPC)

Company profile: Marathon Petroleum, with a $16 billion market value, is a supplier of gasoline and distillates to resellers and consumers. It owns refining, marketing, and transportation operations, primarily located in the Midwest and Southeastern U.S.

Analysts estimate it will earn $5.01 per share this year and that that will grow by 11% to $5.55 in 2013.

Investor takeaway: Marathon Petroleum's shares are up 31% this year. S&P has a "buy" recommendation on its stock with a four-star rating out of a possible five, with a $49 price target, a 10% premium to the current price. Its shares have a 2.3% dividend yield.

1. Bank of America ( BAC)

Company profile: Bank of America is one of the largest financial institutions in the world, with lending operations in the consumer, small business, and corporate arenas as well as asset management and investment banking divisions. It posted net income of $85 million, or 1 cent per share, for 2011, in line with analysts' expectations. Bank of America has assets of $2.1 trillion.

Investor takeaway: The bank's shares are up 48% this year, but over 12 months are down 44%. The bank faces lots of challenges before it returns to solid fiscal health, but investors apparently think they can be met, given the share-price rise this year. It was trading at half of book value late last year, so investors may think its shares bottomed.

S&P has it rated "hold" and forecasts earnings of 72 cents per share this year, rising to $1.08 per share in 2013. Analysts give it six "buy" ratings, four "buy/holds," 19 "holds," and one "weak hold." Its shares were downgraded to "neutral" from "buy" by Citigroup on Tuesday, based on valuation concerns, following their recent run-up.

>>To see these stocks in action, visit the 10 Top Value Stocks With Big Gains in 2012 portfolio on Stockpickr.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

More from Investing

General Electric's Stock Price Is at a Crossroads

General Electric's Stock Price Is at a Crossroads

Adobe-Magento Deal Highlights Escalating Cloud Wars

Adobe-Magento Deal Highlights Escalating Cloud Wars

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives