RBC gives 5 reasons stocks are headed higher

S&P 500 valuations are up 55 percent over the past five years, leading investors to question sustainability, but stocks should still head higher, RBC's chief U.S. market strategist told CNBC on Thursday.

Jonathan Golub cited five reasons for why he's bullish on the stock market.

1. Cash flow

Solid cash flow will be a major driver of the market, Golub said on "Worldwide Exchange." "Earnings have been disappointing, but companies are doing a fantastic job of generating more cash flow for every dollar of earnings."

While some market watchers say earnings season is starting off on the wrong foot, Golub disagreed. "If you look at the early reports, they're beating by something like 5 percent, so that's actually a decent number," he said.

2. Return of capital

Another reason for Golub's bullish call, return of capital: "Right now if you take dividends and buybacks together ... the yield on the S&P is 4.6 percent. That's an unbelievable number given where corporate bond yields are."

"That makes stocks very attractive," he continued, "and 100 percent of this is from cash flow from operations."

3. Volatility

Volatility is another factor that will help stocks rally, and Golub said the logic is simple: "The VIX is down. ... If you have less volatility, you pay more for assets."

4. Stock valuations

Looking at stock valuations for clues, historically, they tend to move from low to high over long periods of time, Golub said — predicting the current swing higher has room to grow.

5. Only a few excesses

Golub's last supporting argument is stocks are more likely to slip into correction when sectors are unreasonably priced. There are few excesses in the market, he argued.