Leon Cooperman, whose hedge fund has averaged 16% annualized returns over its 18 years of existence — 6 points per year more than the S&P 500 — thinks we’re still early in the bull market.

In a recent interview with Fortune, Cooperman says he isn’t “wildly bullish”, but thinks the S&P can return 10% to 12% for 2010. “There’s unanimous agreement that the recession ended in June, July, August of 2009, ” he said. “If that’s the case, we’re only six, seven, or eight months into a new economic expansion. Almost everybody — myself included — agrees it’s not going to be robust, but if it matches the average, we have several years of growth ahead of us.”

Cooperman says stock valuations are reasonable, and adds that investor sentiment is a positive in terms of laying the groundwork for more gains, as individual investors continue to dump equity mutual funds and buy up fixed income funds.

Cooperman says his firm is underweighted in high P/E stocks, utilities, and some consumer discretionary firms. “But we’re eclectic and very bottom-up in terms of quality-growth franchise-type companies,” he says. “We like Microsoft, McDonald’s, and Pepsico. And with oil prices crossing $81 a barrel, we like energy stocks.”