Despite the recent downgrade of US debt and the concerns surrounding its economy, there are still opportunities in US equities, according to ClearBridge Advisors.

A subsidiary of Legg Mason, ClearBridge Advisors is bullish on equities at the moment and said US equities remain attractive, as the companies are in great shape, profit margins are at an all-time high, balance sheets are robust and throwing off a lot of cash flow.

Portfolio manager at ClearBridge Advisors Mike Clarfeld explained: “One of the most powerful things going on for investors at the moment is dividends. Dividends are at attractive levels and can be a good driver of returns going forward. In the large cap blue chip space, which is where we think the best opportunities are, you can get great companies with around 3% dividend yields. When we combine the balance sheet strength, profitability, valuations and dividends we are pretty constructive on the large cap names.”

He added that growing demand from emerging markets is driving revenue growth for the large multinational companies, while the presence of low cost manufacturing has improved the cost basis and profit margins for these companies.

“We are currently in a situation where there will be a lot of turbulence and volatility - investors need to expect that. Yet while we continue to be cautious, it is also important, to hold your nose a little bit and start investing based on a disciplined approach- it is time to start incrementally adding to equities,” he said.

“One does not have to take a lot of risk today in the equity market to get attractive investment opportunities. While we are actively buying stocks to take advantage of recent market weakness, we are buying names that we view as high quality and which enjoy relatively predictable and stable earnings streams.”

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