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There have been more warnings of a "lost decade" of returns for the stock market in recent months. Still, the chances of that actually happening appear less likely, given this year's massive 25% plunge.

That's according to a Friday note from Bank of America strategist Savita Subramanian, who was one of the first on Wall Street to warn of a potential lost decade late last year.

She noted that with plummeting stock markets come falling valuations, which are now starting to appear attractive for longer-term investors. The S&P 500's price-to-earnings multiple has plunged considerably so far this year, with the trailing and forward P/E ratios dropping 36% and 29%, respectively.

A valuation model used by the bank suggests forward annualized price returns of 6% for the S&P 500 over the next decade. That's the highest return forecast since May 2020. 

"Valuation matters long-term, explaining ~80% of subsequent 10-yr S&P 500 returns," Subramanian said. "And this year's bear market provides an attractive opportunity for long-term investors." 

This would put the S&P 500 at just above 6,500 by 2032, representing a potential surge of nearly 80% from Thursday's close. With the addition of a 2% dividend yield, total annualized returns could be as high as 8%, according to Subramanian.  

But while long-term forecasts look the best they have in over two years, short-term looks more dicey for the stock market, and "near-term pain remains," she said.

"While the S&P 500 fell below our year-end target of 3,600, we continue to expect volatility in the market," Subramanian said, adding that only 20% of her bull market indicators have flashed positive so far. Typically, prior stock market bottoms have seen 80% of those indicators flash green, according to the note.