US equities 'may see 30% upside in 2011'

Investors in US large-cap equities could benefit from up to 30% upside in 2011, says Legg Mason Capital Management's Mary Chris Gay.

Bill Miller's deputy manager on the $4bn Value Trust says analyst expectations for S&P 500 earnings this year are about $95. "This would imply earnings growth of almost 12% versus consensus expectations for 2010 of $85," she says. "If those fair values are achieved, the potential upside for investors is 18%-30%." The three cheapest areas of the market relative to history are healthcare, technology, and financials, which have strong and improving fundamentals and the prospect for top- and bottom-line growth, Gay says. She remains convinced large caps are poised to outperform the sma...