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Now is the time to be encouraged about U.S. equities, analyst says

Stocks are rallying their way into 2017 — the S&P 500 is erasing deficits, the Dow Jones industrial average is up Thursday and the Nasdaq is positive for the month of March.

Equities reaching new highs equates to "good things" for U.S. business profits and employment, one analyst told CNBC on Thursday.

"I'm more encouraged about U.S. equities today than I've been in years," Hennessy Focus Funds' David Rainey said on CNBC's "Power Lunch." There will be bumps along the way, but overall there is a lot of anticipation in the stock market that things will be smooth and trend higher over the next five to 10 years, he said.

As the so-called "800-lb gorilla," or the U.S. government, begins to ease its reins over the economy, this will be beneficial and reflected in data, such as consumer confidence and gross domestic product rates, Rainey added.

As wage growth also picks up, U.S. GDP is closer than ever to reaching 3 percent — something that would be a "miraculous event for America," he said. But it isn't impossible.

PNC Chief Investment Strategist Bill Stone echoed this point in a Thursday CNBC interview, saying: "I think you've seen an up-tick with confidence ... people dismissing how much the data has gotten better."

The Commerce Department announced Thursday that GDP increased at a 2.1 percent annualized rate instead of the previously reported 1.9 percent pace, for its third GDP estimate of the current period.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised to a 3.5 percent rate in the fourth quarter. It was previously reported to have risen at a 3 percent rate.

PNC's Stone would recommend investors consider adding both financial stocks and small caps to their portfolios, as U.S. economic growth improves this year. Stone argues that small-cap stocks will benefit more than large caps from an improvement in U.S. tax policy, which President Donald Trump has promised to work on this year.

But there are some good large-cap stocks out there, too, Rainey said. He would recommend American Tower, which is up more than 10 percent over the past three months; Hexcel, which is up more than 20 percent in the past six months or American Woodmark, which is up close to 20 percent in the past three months.

If anyone's concerned about a pull back in the market, in reality this is a better time for investors to "gain value" ahead of an improving economy, Rainey added. "What's not to like."

— Reuters contributed to this report.

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