NEW YORK ( TheStreet) -- The little guy is still cashing out of U.S. stocks. Thursday's late surge aside, there's been some signs of deterioration in the low-volume rally of late, and even as the finishing touches are being put on the best start to a year for the S&P 500 since the late nineties, Main Street continues to take money off the table. Mutual funds investing in domestic equities saw outflows of $1.79 billion in the week ended March 21, according to the latest data from the Investment Company Institute. It's the fifth week in a row that this has occurred, and there's only been two weeks in 2012, basically the beginning of February, when U.S. stock funds saw inflows, and since then, a total of $9.5 billion has been pulled out. Not a staggering number, of course, but still indicative of retail sentiment. For perspective, mutual funds investing in bonds saw inflows of $5.66 billion last week, ICI said, and a total of $40.2 billion in the latest five weeks. At this point in the rally -- the Dow Jones Industrial Average is up 7.6%, the S&P 500 has gained 11.6%, and the Nasdaq has risen 18.8% -- a rush into U.S. stocks by retail investors would surely be seen as a contrarian indicator, but it's still interesting that these outsized gains haven't enticed Main Street to seek more exposure. Going from small investors to small-cap stocks, Bank of America Merrill Lynch voiced some concern about how much further stocks can run earlier this week. The firm's small-cap team noted that the gains the group, which usually moves ahead of the large- and mid-caps and in more dramatic fashion, have enjoyed since the recession are outsized from a historical standpoint. "Small caps are up over 36% since October 3 when on average they have returned 16.5% in the back half of a recession," B of A said. "For this rally to continue, we think the economic news and earnings growth needs to continue to show strength and we are not sure if this will be the case."
The firm thinks valuations are now a bit stretched -- the Russell 2000 had a forward P/E of 20.3X vs. 13.6X for the S&P 500 as of Friday's close -- and thinks earnings season could present a challenge. "Also another potential headwind is the fact that valuations are above average on an absolute basis and relative to large caps and the spread is back above the one standard deviation line," B of A said. "We have also seen earnings growth come in better up the market-cap spectrum and thus a pause to refresh may be ahead of us sooner rather than later." As for Friday's scheduled news, Finish Line ( FINL) is one of the few companies opening its books on Friday. The Indianapolis-based specialty retailer of athletic casual footwear and apparel is reporting its fiscal fourth-quarter results before the opening , and the average estimate of analysts polled by Thomson Reuters is for earnings of 81 cents a share in the February-ended period on revenue of $432.6 million. The stock has been on a tear in 2012, rising more than 30% year-to-date, and hitting a 52-week high of $26.16 on March 26, so the stakes are high for the company to deliver strong numbers. An in-line revenue performance in the fourth quarter would represent more than respectable growth of 12.5% from last year's total of $384.6 million. Finish Line has been building up its digital sales, which rose more than 60% year-over-year in the third quarter, and boosted its quarterly dividend by 20% in early January to 6 cents a share from 5 cents. It also had no debt and more than $215 million at the end of the third quarter. The sell side is overwhelmingly bullish on the stock with 12 of the 13 analysts covering Finish Line at either strong buy (8) or buy (4), and the median 12-month price target at $28, implying potential upside of 10.5% from Thursday's close at $25.34. At current levels, the shares trade at a forward P/E multiple of 13.9X vs. 12.7X for competitors Foot Locker ( FL), 19X for Hibbett Sports ( HIBB), and 17.2X for Dick's Sporting Goods ( DKS).
Sterne Agee previewed the quarter on March 15, saying it thinks the company is on the right track by making online sales a priority. "We believe that FINL's commitment to investing in digital commerce is absolutely necessary for long-term success," said the firm, which has a buy rating on the stock with a $27 price target. "FINL is managing its business for EBIT
earnings before interest and taxes . Since there are no occupancy expenses associated with the digital business, we continue to expect significant increases in GM gross margin . However, the variable costs associated with digital (shipping, phone centers), will limit SG&A selling, general and administrative expenses leverage, even with high SSS same-store sales ." Longer-term, Sterne Agee sees a number of positive catalysts for the company's business. "We expect the athletic footwear cycle (especially lightweight running) to continue to accelerate in the coming years," the firm said. "We believe that we are two years into what is normally a four- to five-year athletic footwear cycle. We expect to see continued innovation from leading vendors, especially heading into the summer Olympics. Recent price increases are combined with new technologies and style, and are unlikely to be met with resistance. We expect the innovative cycle to continue for some time to come which should lead to fixed-cost leverage, and may lead to the athletic cycle lasting longer than normal." Check out TheStreet's quote page for Finish Line for year-to-date share performance, analyst ratings, earnings estimates and much more. Friday's economic calendar is semi-packed with personal income and spending for February at 8:30 a.m. ET; the Chicago purchasing managers index for March at 9:45 a.m. ET; and the final University of Michigan consumer sentiment reading for March at 9:55 a.m. ET. And finally, Research In Motion will see heavy trading on Friday as investors grapple with an avalanche of news after the bell. The BlackBerry maker fell short with its fourth-quarter results and said it won't be providing guidance because of expectations for "continued pressure on revenue and earnings throughout fiscal 2013." Trading was volatile in the extended session with RIM shares ranging from $12.37 to $14.23. The stock was last quoted at $13.43, down 2.2%, on volume of 7.4 million, according to Nasdaq.com. Apple ( AAPL) will also be a topic on Friday after a labor advocacy group released the findings of an audit of working conditions at Foxconn, a major Apple supplier in China. Apple CEO Tim Cook visited a Foxconn facility in China on Thursday, and Foxconn has reportedly promised to make improvements, but it's not clear how this may or may not impact the company's relationship with Apple, which is part of the Fair Labor Association that conducted the audit. Apple's stock fell 1.2% to $$609.86 on Thursday, putting the shares 2% below their all-time high of $621.45 set on Wednesday. -- Written by Michael Baron in New York. >To contact the writer of this article, click here: Michael Baron.