Stocks may be overvalued on a price-earnings basis, but they're still likely to rise further, says Paul Hickey, co-founder of the Bespoke Investment Group.

The Standard & Poor's 500 Index soared 29.6 percent last year.

Hickey and fellow Bespoke founder Justin Walters note in a report obtained by The New York Times that the market's price-earnings ratio, based on trailing 12-month profits, jumped 23 percent in 2013 to end the year at 18.01. That compares with a historical average of 15.3.

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So "technically speaking," stocks were overvalued by year-end, the duo writes. "2013 really marked the year where investors recognized that equities were attractively valued."

But Hickey thinks stocks will climb still further, even though the ascent won't be as smooth as it was in 2012 and 2013.

"In the later stages of bull markets, valuations generally expand, and that's what's happened here," Hickey tells The Times. "Prices today aren't nearly as attractive as they were, but typically bulls don't end with the market at an average valuation. Bull markets typically overshoot."

Meanwhile, Bob Doll, chief equity strategist at Nuveen Asset Management, says stocks are likely to continue their rally in 2014, though not at the torrid pace of last year.

Companies will boost their performance with double-digit percentage increases in dividends, stock buybacks and capital expenditures, he writes in a forecast obtained by CNBC. He also sees merger activity increasing.

"While expectations of high single-digit or low double-digit percentage gains are not unreasonable, we also think a noticeable pullback some time during the year is likely to be caused by overbought and deteriorating technical conditions," Doll explains.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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