Stocks could still surge 9 percent

“That upside consolidation phase tells me that we’re going to be above 3,000 probably by Thanksgiving and probably 3,100 to 3,200 by the end of the year,” Saut said.

It’s unusual for Saut to issue price targets. But, he’s so confident stocks are heading even higher, he’s making an exception.

“My father was a portfolio manager, and he told me if you get it directionally correct, you’re ahead of the crowd. So, don’t give people targets,” Saut said. “But earnings continue to come in better than expected. Valuations are not that high.”

Saut’s latest read on stocks came as the S&P 500 reached a fresh all-time high and closed above 2,900 for the first time. It’s now about 13 percent higher since the Feb. 9 correction low. The Nasdaq also reached a record high.

In this environment, he likes all industries except utilities and consumer staples, which he deems as too expensive based on valuations. Right now, he’s highlighting financials as a group that could grab substantial gains.

“They are in a secular bull market, and they remain undervalued here because too many people are looking at the yield curve,” Saut said. “We continue to think that earnings [will] come in better than expected, and people are still fearful.”

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