10 Mid-Cap Stocks That Have Almost Doubled in 2012 (Update2)

(Story updated to add that Barclays Capital initiated coverage of Weight Watchers International with an "overweight" rating.)

BOSTON ( TheStreet) -- Mid-cap stocks, companies with market values between $1 billion and $10 billion, tend to get overlooked by investors, who gravitate to the high-profile stability of S&P 500 large-cap stocks or chase the returns on fast-moving small-caps.

But they're missing out on what is a hot spot this year. The S&P Mid-Cap 400 Index has returned 10%, better than the S&P 500's 8% rise and the small-cap Russell 2000 Index's 7.6 % gain.

What's more, Fidelity Investments said this week that "on a risk-adjusted basis, (mid-caps) have outperformed their small- and large-cap cousins over the past 20 years" and "there are compelling reasons to believe that outperformance could continue."

Mid-cap stocks have greater growth potential than large-caps, carry less risk than small-caps and, given the huge cash holdings of many of S&P 500 member companies, they could be takeover targets, which would result in a healthy premium for existing shareholders, Fidelity said.

John Roth, manager of the Fidelity Mid-Cap Stock Fund ( FMCSX), said earnings growth is what principally drives share-price appreciation in the mid-cap category, rather than the many variables, financial and otherwise, that can influence other capitalization sectors. "That gives me some comfort that this is a trend that could be here to stay," Roth said.

S&P Capital IQ also sang the praises of mid-cap stocks recently, saying that "compared to small-caps, mid-caps are typically better-established companies with more seasoned management teams, relatively developed distribution and a solid presence in the markets in which they compete. On the other side, mid-caps can grow faster and are generally less bureaucratic than larger companies."

Here are 10 mid-cap stocks with good earnings trends, solid financial fundamentals and total returns of 35% to 89% this year, presented in inverse order of return:

10. Teradata ( TDC)

Company profile: Teradata, with a market value of $11 billion, is a developer of data warehousing services for large organizations worldwide. Its business includes hardware, software and support services.

Investor takeaway: Its shares are up 35% this year and have a three-year average annual return of 60%. Analysts give them four "buy" ratings, four "buy/holds," eight "holds," and one "weak hold," according to a survey of analysts by S&P. S&P has it rated "hold" on valuation concerns.

9. LSI ( LSI )

Company profile: LSI, with a market value of $5 billion, produces standard and customized integrated circuit chips that support applications in enterprise storage and networking. It also provides external storage systems and software applications for storage area networks.

Investor takeaway: LSI's shares are up 40% this year and have a three-year average annual return of 47%. Analysts give its shares six "buy" ratings, two "buy/holds," five "holds," and one "weak hold," per S&P.

8. Parametric Technology ( PMTC)

Company profile: Parametric Technology, with a $3 billion market value, licenses computer-aided design, product life-cycle management, and enterprise content management software that allows manufacturers to design and build products faster.

Investor takeaway: Its shares are up 42% this year and have a three-year, average annual return of 52%. Analysts give its shares five "buy" ratings, four "buy/holds," and four "holds," according to a survey of analysts by S&P.

7. Weight Watchers International ( WTW)

Company profile: Weight Watchers, with a $6 billion market value, is a weight-management company with operations in more than 25 countries. Consumers buy more than $4 billion of Weight Watchers-branded products each year, and every week about 1.8 million people attend Weight Watchers meetings worldwide. The company encourages healthy weight loss through exercise, nutrition, and portion control.

Investor takeaway: Its shares are up 42% this year and have a three-year average annual return of 63%. Analysts give them nine "hold" ratings, according to S&P. For fiscal 2012, analysts estimate that the company will earn $4.67 per share and that that will grow by 15% to $5.38 in 2013.

Barclays Capital initiated coverage of Weight Watchers with an "overweight" rating today, citing demographic trends that would support future growth. That means the firm's analysts expect the shares to outperform the market. Barclays noted that about 70% of the U.S. population is overweight, which means more are likely to avail themselves of Weight Watchers services.

6. VeriFone Systems ( PAY)

Company profile: VeriFone Systems, with a market value of $5.5 billion, makes electronic point-of-sale payment terminals used by retailers, petroleum companies, government organizations, and payment processing companies.

Investor takeaway: Its shares are up 45% this year and have a three-year average annual return of 134%. Analysts give them five "buy" ratings, three "buy/holds," and five "holds," according to a survey of analysts by S&P. For fiscal 2012, analysts estimate it will earn $2.59 per share and that that will grow 24% to $3.22 per share next year.

VeriFone reported Monday that during its fiscal quarter ended Jan. 31, it had a net loss of 3 cents per share, compared to net income of 35 cents per share last year. Revenue rose 2% to $420 million. The company said it expects its 2012 net income to be higher than analysts expect, at $2.60 per share to $2.66 per share, versus the consensus analysts forecast of $2.59 per share.

5. AthenaHealth ( ATHN)

Company profile: AthenaHealth, with a market value of $2.6 billion, provides Internet-based business services to physician practices.

Investor takeaway: Its shares are up 47% this year and have a three-year average annual return of 39%. Analysts give them three "buy" ratings, two "buy/holds," 13 "holds," one "weak hold," and two "sells," according to a survey of analysts by S&P.

4. Skyworks Solutions ( SWKS)

Company profile: Skyworks Solutions, with a market value of $5 billion, makess semiconductor components for wireless handsets, including power amplifiers, integrated front-end modules, and direct conversion radios.

Investor takeaway: Its shares are up 51% this year and have a three-year average annual return of 55%. Analysts give them 11 "buy" ratings, five "buy/holds," and three "holds," according to a survey of analysts by S&P. It's expected to earn $1.87 per share this year and grow by 11% next year.

3. Tempur-Pedic International ( TPX)

Company profile: Tempur-Pedic International, with a market value of $5 billion, makes viscoelastic foam mattresses, pillows, and other sleep system products, which, packaged together, can run several thousand dollars.

Investor takeaway: Its shares are up 52% this year and have a three-year average annual return of 161%. Analysts give them nine "buy" ratings, two "buy/holds," and four "holds," according to a survey of analysts by S&P. It's expected to earn $3.99 per share this year, and grow by 17% to $4.67 in 2013.

2. Fossil ( FOSL)

Company profile: Fossil, with a market value of $8 billion, makes wristwatches under the Fossil, Relic and Zodiac brand names, along with a complementary line of leather goods, sunglasses and jewelry. Its products are sold in department and specialty retail stores.

Investor takeaway: Its shares are up 55% this year and have a three-year average annual return of 119%. Analysts give them five "buy" ratings, five "buy/holds," and five "holds," per S&P. S&P, which has it "buy"-rated with a $125 price target, an 11% premium.

1. Regeneron ( REGN)

Company profile: Regeneron, with a market value of $10 billion, discovers, develops, and commercializes products that fight inflammation, cancer, and eye disease. Last year, it won FDA approval and launched EYLEA for the treatment of wet age-related macular degeneration.

Investor takeaway: Its shares are up 89% this year and have a three-year average annual return of 102%. Analysts give them eight "buy" ratings, one "buy/hold," and seven "holds," according to a survey of analysts by S&P. S&P has it rated "hold," due to its recent share-price jump, but said it has a "robust" pipeline of potential new products.

>>To see these stocks in action, visit the 10 Mid-Cap Stocks That Have Almost Doubled in 2012 portfolio on Stockpickr.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

If you liked this article you might like

Dow Soars Over 250 Points to Post Its Fourth Straight Day of Gains
Buy Apple Stock After Monster Rally From This Retail Stock

Buy Apple Stock After Monster Rally From This Retail Stock

Jim Cramer on What Fossil's Wearables Strength Means for Apple

Jim Cramer on What Fossil's Wearables Strength Means for Apple

Investors Finally Dig Fossil Group

Investors Finally Dig Fossil Group

Fossil Stock Soars 87% and May Have Another 50% Rally Coming

Fossil Stock Soars 87% and May Have Another 50% Rally Coming