S&P Capital IQ: S&P 500 Will Hit 2,100 Within 12 Months

Friday, 06 Jun 2014 07:16 AM

By Dan Weil

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The S&P 500 has reached yet another record high Thursday, and analysts at S&P Capital IQ think the five-year rally has more room to run.

The firm raised its 12-month target for the index to 2,100 from 1,985 previously, MarketWatch reports.  The S&P 500 closed at 1,940.46 Thursday.

S&P Capital IQ analysts expect S&P 500 companies' earnings per share to jump 12.4 percent in the second quarter of 2015 from the same period this year.

Editor's Note:
38 Investments That Profit 96% of the Time (Free Video)


This could mean that the index's price-earnings ratio would shrink below 17. The ratio, based on trailing 12-month earnings, was 18.3 as of May 30, according to Birinyi Associates.

To be sure, the S&P Capital IQ analysts don't anticipate significant gains for the S&P 500 until other indexes breach current resistance levels. The Nasdaq Composite and the Russell 2000 index of small-cap stocks have lagged behind the S&P 500 and Dow Jones Industrial Average since March.

Meanwhile, S&P Capital IQ left its model portfolio allocations unchanged at 50 percent U.S. stocks, 15 percent international stocks, 25 percent bonds and 10 percent cash.

Not everyone is enthusiastic about stocks. The lagging performance of the Nasdaq Composite and the Russell 2000 show it's not a real bull market, says Bert Dohmen, president of Dohmen Capital Research.

The rally has been built largely on share buybacks, meaning it's "just smoke and mirrors," he writes in an article for Forbes.

Editor's Note: 38 Investments That Profit 96% of the Time (Free Video)

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