'Find growth': Strategist tells investors not to worry about high stock valuations

Investors should disregard concerns over high valuations and focus on growth in what is now a "stockpicker's market," according to Matt Orton, chief market strategist at Raymond James Investment Management.

The S&P 500 closed out a two-week losing streak on Friday, but Orton told CNBC that stock market gains are broadening and brief pullbacks should be used "opportunistically."

Much of the significant rally over the last 18 months has been driven by the so-called "Magnificent 7" megacap tech stocks, but they have begun to diverge.

Apple is down 10%, while Tesla is 34% lower. Microsoft, Amazon and Meta are up 11%, 15% and 37% respectively. Nvidia, meanwhile, is 77% higher and Alphabet is little changed, up 1%.

"We're back to a stockpicker's market – idiosyncratic risk is finally being rewarded again and that, to me, is most important. It means that you have the opportunity to diversify your portfolio and actually lean into what works and lean out of what's not," Orton told CNBC's "Squawk Box Europe" on Monday.

"I think the fact that [Apple and Tesla] have fallen behind, whereas your Alphabet's kind of middling and the rest of the Mag 7 are doing well, it just speaks to the fact that the fundamentals matter once again, and there's plenty of strong fundamentals not just in the Mag 7 but look at industrials, financials are actually starting to improve."

Commentary around the market rally has beenfocused on the high valuations of U.S. stocks. Nvidia trades at around 35 times forward earnings, according to FactSet data, and the broader Magnificent 7 trades at an average of around 34 times forward earnings. The S&P 500, meanwhile, is at a historically high average of 21 times forward earnings.

The forward price-earnings (P/E) ratio