Stocks will rise about 7 percent from current levels by the end of next year, investment strategists at Barclays Capital Inc. said this week.
The S&P 500 will end 2017 at 2,400, up from about 2,262.03 at the close of Thursday trading. The stock benchmark has risen 11 percent this year and this week hit a record of 2,277.50.
“Following two years of stagnation we believe earnings-per-share growth is poised to return in 2017,” Jonathan Glionna, head U.S. equity strategist at Barclays, said in a Dec. 13 report obtained by Newsmax Finance.
The investment bank and brokerage provided 5 predictions for 2017:
Prediction 1: S&P 500 adjusted EPS will break out to at least $127/share. “Following two years of stagnation we believe EPS growth is poised to return in 2017 and our forecast is for it to reach at least $127 per share, which would represent 7% growth.”
Prediction 2: Dividends will reach $48 a share, marking a 54 percent increase in just five years. “Rapid and consistent growth in dividends has been one of the most positive themes for the S&P 500 and we expect it to continue in 2017.”
Prediction 3: Gross buybacks will be unchanged at approximately $600 billion. “The recent increase in buybacks has been fueled by debt but elevated leverage ratios suggest further growth may not be achievable.”
Prediction 4: The S&P 500 will end the year at 2,400. “Inherent in this forecast is an assumption that valuation multiples will remain unchanged, as they are already elevated and we are late in the business cycle.”
Prediction 5: Health care will be the best performing sector in the S&P 500. “With a price-to-earnings ratio that is at its 52-week low in relation to the S&P 500, no sector has better potential upside entering 2017.”
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