Despite uncertainly stemming from ongoing "fiscal cliff" negotiations, one analyst sees as much as 10 percent upside for U.S. equities in the new year.
Andrew Root, Macquarie Research's head of U.S. research, told CNBC's "Squawk on the Street" that he thinks earnings will grow despite likely first-quarter choppiness due to fiscal policy uncertainty.
"The China market is much better," he said. "U.S. residential housing is in good shape, so we expect stocks actually to be higher 12 months from now than they are today."
Root expects equity prices to rise between 5 to 10 percent next year.
"I think it's very clear that the U.S. housing market is in much better shape so there are some industrial stocks (Stanley Works is an example) that should be growing earnings through the course of the year almost regardless of whether or not the U.S. fiscal cliff gets settled in a satisfactory fashion," he added.