Over the past few years, the market calls made by bullish strategist Tom Lee have proven prescient. Now, he predicts that 2015 will be an even better year for the market than 2014.
"We remain bullish and expect the S&P 500 to reach 2,325 by YE 2015," he wrote in a Thursday morning note to clients.
With the S&P hitting 2,050 on Thursday, a close of 2,325 would represent a rally of more than 13 percent from current levels. That would easily best this year's 10.6 percent rally.
So how does Lee, the current head of research at Fundstrat Global Advisors and former equity strategist at JPMorgan, reach that target?
"What we're picturing is that earnings growth is around 7 percent or better, and we see the P/E expand," meaning that investors will pay more for each dollar of earnings even as earnings rise, he explained Thursday on CNBC's "Futures Now."
The reason this is a surprising take is that market valuations have already risen considerably, such that the S&P's forward price-earnings ratio is now a bit above historical averages. But that doesn't worry Lee.
"I know people are going to say, 'Hey, the P/E expansion's over, because we're already six years in and the market's at 16 times forward [earnings].' The reality is, if you look at every bull market that's lasted at least four years P/Es expand more than one turn a year until the bull market peaks," he said. "Hey, the market feels expensive, but the P/Es' going to keep going up until there's a recession."