‘Significant’ Further Gains for Stocks: Strategist

Earnings Per Share Will Rise Even More: Expert

As stocks and credit both continue to rally, Brian Reynolds, chief market strategist at Rosenblatt Securities, said investors should opt for the former because the equity market will be boosted by the upsurge in stock buybacks.

"I still think there is a significant upside to stocks, because what has been driving stocks for the last four years has been buybacks, and buyback announcements have accelerated," Reynolds told CNBC on Tuesday.

"All other investors combined over the last four years have been net sellers. This year we are starting to see a little less selling. So if we get more buying from the buybacks, and less selling from the others, you could have significant further gains ahead in the stock market."

(Read More: Apple Shares Jump on Buyback Rumors)

Reynolds views concur with other market players who forecast further gains for equities this year. Daryl Guppy, trader and the author of Trend Trading, forecasts the will rise another 100 points to reach 1,690.

(Read More: Why S&P Rally Has Another 100 Points to Go: Chartist)

Others such as Dan Greenhaus, chief global strategist at BTIG, are less bullish, but still see gains. Greenhaus expects the S&P will reach 1,625 by year-end, a view that is shared by Goldman Sachs and Deutsche Bank.

All three major U.S. equity benchmarks posted record gains in the first quarter, with the Dow piercing through its all-time high at the beginning of March, and the S&P 500 gaining 10 percent on the quarter.

(Read More: Expect Long-Awaited Correction in Q2: Investors)

While Reynolds concurred that 10 percent quarterly gains for the rest of the year were unlikely, he said U.S. stocks were still a better buy than U.S. credit.

"If you just look at the earnings yield on stocks, which is the inverse of the price-earnings ratio, and relate it to the yield on junk bonds, S&P stocks would have to be over 2,500 to match what credit has done in the past four years," he said.

- By CNBC's Katy Barnato