Updated from 8:01 p.m. ET with commentary on Thursday's economic data. NEW YORK ( TheStreet) -- Wednesday's polite pullback aside, 2012 has to be seen as exceeding the expectations of even the most bullish of equity investors so far. It's been a steady march higher with minimal volatility. No nosedives in the portfolio to ponder. A nearly complete about-face from the violent swings that wracked stocks from August through October of 2011. The thing is though, 2011 started out much the same way. Not quite as strong but stocks were looking awfully good this time last year as well and we all know how that turned out. Gary Thayer, chief macro strategist at Wells Fargo, did a little compare-and-contrast of 2011 and 2012 on Wednesday, and his analysis suggests that, while there's no anticipating the curve ball that could come along and knock this uptrend off track, the current environment actually looks more favorable this year than last. For instance, in February 2011, stocks had nearly doubled in the previous two years with only one mild period of correction occurring in the summer of 2010, engendering excessive optimism, according to Thayer, despite headwinds of rising inflation at home and interest rate hikes abroad. These factors exacerbated the volatility that arrived after Japan was hit by its devastating earthquake and tsunami in March, and then the end of QE2 and the U.S. government's debt ceiling debacle were too much for stocks to overcome until much later in the year. Now, conditions appear to be set up much better, Thayer says, barring unforeseen events of course. "The stock market may be starting this year positively like it did last year," he writes. "But many of the fundamentals are better in 2012 than they were in 2011. Inflation is subsiding this year, and many of the central banks that raised rates to fight inflation last year are cutting interest rates this year. As a result, 2011's monetary policy headwinds are a tailwind for the stock market this year." Thayer also thinks that, despite many over-the-top bullish readings on sentiment of late, that investors are more wary now than they were last year, perhaps because of how 2011 ultimately played out.
"Many people are still worried that the U.S. economy might go into recession because of problems in Europe or a hard landing in China," he argues. "Finally the S&P 500 is only slightly higher than it was in February 2011. Consequently, the stock market is not over extended despite its orderly 8% advance during the first seven weeks of 2012." Who knows? Maybe this time slow and steady does win the race. It would incredibly disappointing if the S&P 500 finished flat once again in 2012 after getting off to its best start in more than a decade. As for Thursday's scheduled news, Salesforce.com ( CRM - Get Report) is reporting its fiscal fourth-quarter results after Thursday's closing bell, and the average estimate of analysts polled by Thomson Reuters is for earnings of 40 cents a share in the January-ended period on revenue of $624 million. The San Francisco-based maker of customer relationship management software and cloud computing applications is a former high flier whose shares stalled out at a 52-week high of $160.12 on July 19. The stock is down 4.3% in the past year, but it's participated in the strong start to 2012, rising more than 25% since the calendar turned. The company's performance has been solid as it continues to grow on both the top and bottom lines on a sequential basis but the valuation has been ambitious to say the least. Even now, the stock trades at a forward price-to-earnings multiple of 79.5X vs. 11.2X for a mature company like Oracle ( ORCL) or 46.1X for Rackspace Hosting ( RAX), another cloud computing company. The sell side is still very bullish ahead of the report with 31 of the 41 analysts covering Salesforce.com at strong buy (11) and buy (20) and the 12-month price target sitting at $150, implying potential upside of 14% from Wednesday's close at $128.07. Jefferies previewed the quarter last week, reiterating its buy rating and lifting its price target by 5.6% to $152 from $144. The firm is expecting a profit of 40 cents a share in the quarter, in line with consensus, saying it believes the company reeled in some big fish this past quarter. "Our checks on F4Q12 suggest an increasing volume of large, more complex deals, reflecting the company's intentions to penetrate enterprise customers," Jefferies wrote. "In particular, we heard of two eight-figure (annual contract value) mega transactions signed as well as a broad increase in large deal size and activity."
The firm is also buying into the buzz about the cloud, saying product sales and related services in this area are still the company's biggest revenue drivers. "We have yet to see stronger adoption of the Force.com platform, and it is early days in the monetization of Chatter, Database.com and even Radian 6," the firm said. "The enterprise subscription agreements that CRM is signing can help adoption, but we continue to watch this dynamic as it is ultimately important for the addressable market to continue to expand." Check out TheStreet's quote page for Salesforce.com for year-to-date share performance, analyst ratings, earnings estimates and much more. Another report worth watching will be the fiscal fourth-quarter results of Gap ( GPS - Get Report), which are also due after the close. The San Francisco-based apparel retailer has struggled the past few years, and its stock has reflected this with mediocre returns. The shares finished Wednesday at $22.98, up just 2% over the past year, and below the 52-week high of $23.73 dating back to early May. So far in 2012, Gap's stock has jumped 23%, putting some pressure on the company to back up that appreciation with Thursday's print. The average estimate of analysts polled by Thomson Reuters is calling for Gap to deliver earnings of 42 cents a share in the three months ended in January on revenue of $4.29 billion, which would be a tad below last year's equivalent total of $4.36 billion. Despite the surge in the stock in 2012, Gap bulls are hard to find on the sell side with 27 of the 33 analysts covering the company at hold (22) or underperform (5), and the 12-month median price target sitting at $21. Jefferies is one of the believers though, upgrading the stock to a buy and boosting its price target to $26 last week. It thinks the company's outlook for 2012 could surprise to the upside on Thursday. "GPS is on track for an (18%) decline in earnings in 2011," the firm said. "We think consensus for 16% growth in 2012, or $1.78
per share, is beatable as Gap benefits from a shift in its sourcing strategy, lean inventory to end 4Q and ample cash to support another year of aggressive share repurchases."
Jefferies is looking for earnings of $2 per share in 2012 and said it sees this estimate as "conservative" because gross margins could be better than modeled. The firm likes the company's spring collection as well. "We also think the Gap division in particular can benefit from a broad trend in colored denim as well as an improvement in the markdown cadence," Jefferies said, adding later: "Gap has been less promotional vs. last year thus far in spring with Old Navy roughly in line with year ago levels." Check out TheStreet's quote page for Gap for year-to-date share performance, analyst ratings, earnings estimates and much more. Other notable reporters in the morning lineup include Cell Therapeutics ( CTIC), Checkpoint Systems ( CKP), CIBER ( CBR), CMS Energy ( CMS), Coeur D'Alene Mines ( CDE), Denbury Resources ( DNR), DISH Network ( DISH), E-commerce China Dangdang ( DANG), Hormel Foods ( HRL), HSN Inc. ( HSNI), Imax Corp. ( IMAX), Journal Communications ( JRN), KBW Inc. ( KBW), Kohl's ( KSS), LTX-Credence ( LTXC), MetroPCS Communications ( PCS), Ocwen Financial ( OCN), OfficeMax ( OMX), Olympic Steel ( ZEUS), Omnicare ( OCR), Parker Drilling ( PKD), Plains Exploration & Production ( PXP), Radian Group ( RDN), Safeway ( SWY), School Specialty ( SCHS), Sears Holdings ( SHLD), Southern Union ( SUG), TASER International ( TASR), Tim Hortons ( THI), Too Inc. ( TOO), Toro Co. ( TTC), Trina Solar ( TSL), West Marine ( WMAR), and World Wrestling Federation ( WWE). The after-the-bell gang features Active Network ( ACTV), American International Group ( AIG), Autodesk ( DESK), Crocs ( CROX), Deckers Outdoor ( DECK), First Solar ( FSLR), HealthSouth ( HLS), IAMGOLD ( IAG), Kindred Healthcare ( KND), Marvell Technology ( MRVL), OmniVision Technologies ( OVTI), Public Storage ( PSA), TiVo ( TIVO), and WebMD Health ( WBMD). Also on Thursday, Apple ( AAPL - Get Report) is holding its annual shareholder meeting, and the speculation is rampant that the iconic company could announce some sort of dividend. Rather than institute a quarterly payment, some of the most recent chatter has focused on the potential of the company opting for a one-time special dividend from its massive $98 billion cash hoard. That move would quiet some of the outcry for a return of cash to shareholders but also not lock Apple into further outlays. Apple shares took a breather along with the rest of the market on Wednesday, losing 0.4% to $513.04. Unlike the Dow hitting 13,000 briefly then retreating, Apple has made a solid push above $500 since breaching that level on Feb. 13, overcoming a pullback two sessions later, to once again drive higher. Year-to-date, the stock is now up 27%. The economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET, the Federal Housing Finance Agency housing price index for December at 10 a.m. ET, and weekly crude inventories data at 11 a.m. ET.
The consensus estimate is calling for initial claims to come in at 355,000, according to Briefing.com, which itself is at 360,000. Both estimates would be increases from last week's total of 348,000. The trend in claims has been steadily coming down with the days of 400K levels showing up week after week firmly in the rearview mirror, and that improvement is giving investors some of their confidence in the risk-on trade. Ian Shepherdson, chief U.S. economist at High Frequency Economics, thinks small businesses are starting to hire again, and feels that's a very good sign for the economy for the rest of the year. "In our view, the U.S. economy is transitioning quite quickly into a sustained period of growth led by the small business sector, which typically generates about twice as many jobs per incremental unit of GDP as large companies do," he writes. On Thursday though, he too is expecting initial claims of 360,000, saying the odds favor a "modest upside correction" after three weeks of declines. And finally, look for VIVUS ( VVUS - Get Report) to top the percentage gainers charts on Thursday after an Food and Drug Administration advisory committee recommended Qnexa, the company's obesity drug for adults, receive marketing approval. The stock nearly doubled in Thursday's after-hours session on the positive outcome, which doesn't guarantee the company's new drug application will be approved, but does bode exceedingly well. -- Written by Michael Baron in New York. >To contact the writer of this article, click here: Michael Baron.