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Fundstrat's Tom Lee said in a note that the S&P 500 could surge to 5,600 in 2022.
He pointed out that since 1938, the returns for stocks have been strong after a 27% gain.
"Our target for the S&P 500 is conservative, but we also expect plenty of turbulence," Lee said.
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Fundstrat's Tom lee said that the stock market is likely to continue to rise after a solid 2021.
He has set a S&P 500 price target of 5,100 by the end of the year, representing a potential upside of about 7% from Tuesday's close. Fundstrat said that the estimate could be too conservative.
An analysis of past market returns shows that the S&P 500 could go up into next year. The stock market has generated an average and median annual gain of 12% and 16%, respectively, in the year following a rise of at least 27%, according to Lee.
The S&P 500 could reach between 5,400 and 5,600. He said that the base case of the S&P 500 is conservative.
The rise in stocks isn't just being driven by the market. A strong economic backdrop and rising corporate profits are helping it. The rise in equity prices has been justified by the resilience of the economy and the strength of the businesses, according to Lee.
The Fundstrat team is expecting turbulence in the first half of the year, despite the bright outlook. The Fed is on the verge of raising interest rates, COVID cases could remain elevated, supply-chain glitch could persist, and mid-term elections could contribute to uncertainty.
If those risks are obvious, the question is if they have already been discounted by investors.
Lee said a gain of "+12% to +16% probably more appropriate" if they have or not.
Business Insider has an original article.
