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Why Morgan Stanley thinks stocks could be cheap

One of Wall Street's most prominent equity strategists is waving a red cape in front of the bull market.

Morgan Stanley's Adam Parker says investors can expect the S&P 500 to hit 2,275 by the end of 2015. That's more than 10 percent higher than Monday's closing prices.

"The core of our thesis is that we are in the middle of a long U.S. expansion, one that may last until 2020," writes Parker in his most recent report. "Economic factors, like consumer confidence, financial obligations and delinquencies are all improving, and the consumer may be more insulated than investors think from a backup in yields."

Another big factor in Morgan Stanley's S&P 500 price target is an increase in its multiple to forward earnings. Parker estimates the market's multiple will go as high as 16.9 times earnings next year. According to FactSet, the S&P 500 is currently trading at a multiple of around 16.2.

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Morgan Stanley's 2015 target is within reach, provided nothing goes wrong, according to Gina Sanchez, founder of Chantico Global.

"You could get about a 10 percent rally next year if … there are absolutely no hiccups on the road," said Sanchez, a CNBC contributor. "Now there are a lot of questions by the bond market as to whether or not this is a really sustainable, high-quality level of demand if this recovery is actually as strong as we think it is…. But I would say right now you probably just lean in until the end of the year because [December] is usually a pretty good month."

(Read: This bearish indicator just neared its precrash high)

Some argue that Morgan Stanley's Parker isn't optimistic enough.

"He's still too conservative," said Craig Johnson, senior technical research strategist at Piper Jaffray. "We set out on our price objective a number of 2,350 next year, based upon the charts. And we still think there's still very good upside left to be had."

Johnson, who is also president of the Markets Technician Association, sees the S&P 500 as trading along an upward-sloping trend line that began in the middle of 2010. He takes the index's higher highs and higher lows to be a good sign.

"We want to be buying the dips here on this market because we have not seen any sort of major trend change," he said. "All we have seen is little buying opportunities. And we think that this market is really geared to work for many different reasons."

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