15 Best Stocks at Top-Performing Mutual Funds (Update1)

(Story updated to add that Regeneron raised its 2012 sales outlook for its leading product, Eylea.)

BOSTON ( TheStreet) -- Equity mutual funds aren't doing much better than the benchmark index this year when fees are added. That's after a disappointing 2011, when the average U.S. stock fund lost investors money. But taking a peek at the top holdings of this year's better-performing, highly rated funds narrows down the superior investment ideas.

And that may be the best way to use mutual funds, as investing in them can prove to be costly. The average return for the almost 9,400 domestic equity funds tracked by Morningstar is 10% this year, versus the S&P 500's 8.3% gain. Last year the same group fell 2.5% versus the 2.1% increase for the benchmark.

And that's why they're losing ground to exchange traded funds. Investors pulled $135 billion from domestic stock mutual funds in 2011, the fifth straight year of withdrawals, according to the Investment Company Institute.

But that's not to say that many U.S. stock funds aren't worth their fees.

We screened for top-performing, actively-managed, diverse, domestic mutual funds that have at least a three-star rating from Morningstar and assets of at least $1 billion to see what their best performers are.

We chose five funds, including large-cap and mid-cap funds, that fit the bill with returns of 13.6% to 20% this year, and then culled their portfolios for some of their best performers.

The funds are: the $10 billion, large-cap growth fund Wells Fargo Advantage Growth Investor ( SGROX), which is up 13.6% this year and has a five-star Morningstar rating, its highest; the $40 billion, large-cap growth fund Fidelity Growth Company ( FDGRX ), with a return of 14.3% and five stars from Morningstar; the $2 billion large-cap growth fund Touchstone Sands Capital Capital Select Growth ( TSNCX), up 15.3% and has a four-star rating from Morningstar; the $6 billion Artisan Mid-Cap Fund ( ARTMX), up 16.6% and with a four-star Morningstar rating; and the $1.2 billion Hotchkis and Wiley Mid-Cap Value Fund ( HWMIX), up 20% and with a three-star rating from Morningstar.

It's no surprise that most large-cap funds, and many in other categories, have iPad and iPhone maker Apple ( AAPL) as a top pick, so that won't be included in the stocks summarized below.

Here are 15 stocks that are big winners for five mutual funds this year, with three coming from each, ranked in inverse order of their returns:

15. Visa ( V)

Company profile: Visa, with a market value of $95 billion, manages a group of global payment card brands, which it licenses to financial institutions that issue cards to their customers. It acts as the payment processor.

Investor takeaway: Visa's shares are up 15% this year and have a three-year 28% annualized return. Analysts give its shares 18 "buy" ratings, 10 "buy/holds," and eight "holds." They project earnings of $5.95 this year, growing to $6.95 in 2013. Institutional investors own 56% of its shares.

14. Whole Foods ( WFM)

Company profile: Whole Foods, with a $15 billion market value, is the largest U.S. retailer of natural and organic foods, with about 300 stores in the U.S., as well as in Canada and the U.K.

Investor takeaway: Whole Foods' shares are up 16% this year and have a three-year annualized return of 85%. Analysts give its shares nine "buy" ratings, five "buy/holds," and nine "holds," according to S&P, which gives it its "strong buy" rating. Those same analysts project earnings of $2.33 per share this year and that they will grow by 15% next year.

13. Alexion Pharmaceuticals ( ALXN)

Company profile: Alexion Pharmaceuticals specializes in the development and marketing of drugs for life-threatening medical conditions, including cancer.

Investor takeaway: Its shares are up 16.7% this year and have a three-year annualized return of 64%. Analysts give its shares 1 "buy" ratings, six "buy/holds," seven "holds," and one "weak hold," according to S&P. Fidelity owns 11.5% of Alexion's shares, by far the largest stake.

12. Red Hat ( RHT )

Company profile: Red Hat, with a $10 billion market value, is a leading provider of distribution and support for open-source operating systems and middleware, including most prominently, Red Hat Enterprise Linux.

Investor takeaway: Red Hat's shares are up 18% this year and have a three-year annualized return of 50%. Analysts give its shares nine "buy" ratings, eight "buy/holds," seven "holds," two "weak holds," and one "sell," according to S&P, which has the shares rated "hold."

11. Trimble Navigation ( TRMB)

Company profile: Trimble Navigation, with a $6.3 billion market value, sells advanced global-satellite positioning instruments to government and commercial customers worldwide. They are used in surveying, vehicle navigation systems, mapping equipment, and instruments sold to the agricultural, military, aviation, and construction industries.

Investor takeaway: Trimble Navigation's shares are up 18% this year and have a three-year annualized return of 54%. Analysts give its shares five "buy" ratings, four "buy/holds," and five "holds," according to S&P. S&P has the stock rated "hold," on valuation concerns and a view that demand may be slowing in the near term.

10. Discover Financial Services ( DFS)

Company profile: Discover Financial Services, with a $16 billion market value, issues credit cards and acquires transactions. It operates a closed-loop credit card network and also uses third parties to issue its cards.

Investor takeaway: Discover's shares are up 24% this year and have a three-year annualized return of 74%. Analysts give its shares 10 "buy" ratings, six "buy/holds," and nine "holds," according to S&P, which has its shares rated "buy."

9. Salesforce.com ( CRM)

Company profile: Salesforce.com, with a market value of $18 billion, is the leading provider of hosted customer relationship management, or CRM, software services. It's a big player in the rapidly growing cloud computing sector.

Investor takeaway: Salesforce's shares are up 26% this year and have a three-year annualized return of 70%. Analysts differ strongly on this one with S&P recently downgrading it two weeks ago to a "strong sell rating," on competitive and pricing concerns, while other analysts give its shares 17 "buy" ratings, 14 "buy/holds," six "holds," one "weak hold," and six "sells." Fidelity owns almost 15% of its shares, more than double that of the next largest shareholder.

8. Pioneer Natural Resources ( PXD)

Company profile: Pioneer Natural Resources, with a market value of $13 billion, is an independent exploration and production company with operations throughout the southern and central U.S.

Investor takeaway: Pioneer's shares are up 27% this year and have a three-year annualized return of 96%. Analysts give its shares 14 "buy"ratings, six "buy/holds," and seven "holds," according to S&P, which has its shares rated "buy," with a $125 price target, a 10% premium to the current price.

7. National Oilwell Varco ( NOV)

Company profile: National Oilwell Varco, with a market value of $37 billion, is one of the largest equipment suppliers in the drilling industry. It provides rigs, parts and repair services.

Investor takeaway: Its shares are up 28% this year, and have a three-year annualized return of 51%. National Oilwell Varco's 10-year annualized return is a huge 25%. S&P has its shares rated "buy," and its survey of analysts found 17 "buy" ratings, 11 "buy/holds," and one "hold."

6. Valassis Communications ( VCI)

Company profile: Valassis Communications, with a $1.1 billion market value, is a marketing services company with several operating segments, including publication inserts, shared mail, and newspaper advertisements.

Investor takeaway: Its shares are up 32% this year and have a three-year annualized return of 164%. Analysts give its shares four "buy" ratings, three "buy/holds," and two "holds," according to S&P. Analysts project earnings of $3.05 per share this year, a 17% increase over the prior year.

5. CA Technologies ( CA)

Company profile: CA Technologies is one of the largest independent providers of IT management software.

Investor takeaway: Its shares are up 34% this year and have a three-year annualized return of 17%. Analysts give its shares Analysts give CA's shares two "buy"ratings, four "buy/holds," and 10 "holds," according to S&P. Institutional investors own 75% of its stock.

4. Fossil ( FOSL)

Company profile: Fossil, with a market cap of $7.4 billion, makes wristwatches under the Fossil, Relic and Zodiac brand names, and also produces a complementary line of belts, purses, sunglasses, and jewelry, products that are sold worldwide.

Investor takeaway: Fossil shares are up 46% this year, and have a three-year annualized return of 104%. S&P has its shares rated "buy," with a $125 price target, a 6% premium to the current price. Other analysts give its shares five "buy" ratings, five "buy/holds," and five "holds."

3. Illumina ( ILMN)

Company profile: Illumina, with a $6.2 billion market value, makes equipment and consumables for genetic analysis. Its customers include academics, genome centers and pharmaceutical firms.

Investor takeaway: Its shares are up 67% this year, and have a three-year annualized return of 15.6%. Analysts give Illumina's shares six "buy" ratings, two "buy/holds," 13 "holds," and one "sell," according to S&P. Mutual funds own almost 50% of its shares.

2. Regeneron Pharmaceuticals ( REGN)

Company profile: Regeneron Pharmaceuticals, with a market value of $9.8 billion, develops products that fight inflammation, cancer and eye disease. Regeneron said recently, that it expects 2012 sales for its flagship product Eylea, which treats macular degeneration, to be in the range of $250 million to $300 million, up from a prior forecast range of $140 million to $160 million. In the fourth quarter 2011, Regeneron said its loss widened to $53.4 million, or 58 cents per share, from $14.6 million, or 17 cents per share, a year earlier.

Investor takeaway: Its shares are up 80% this year, and have a three-year annualized return of 76%. Analysts give its shares eight "buy" ratings, one "buy/hold," six "holds," and one "weak hold," according to S&P.

1. Cobalt International Energy ( CIE)

Company profile: Cobalt International Energy, with a $12 billion market value, is an independent, oil-focused exploration and production company.

Investor takeaway: Its shares are up 105% this year and 115% since it went public about a year ago. Analysts give its shares five "buy" ratings, four "buy/holds," and two "holds," according to S&P.

>>To see these stocks in action, visit the 15 Best Stocks at Top-Performing Mutual Funds portfolio on Stockpickr.

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

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