As S&P 500 sits at a record, nearly a quarter of stocks are still stuck in a bear market

Not all stocks have joined in on the S&P 500's move back to records.

Nearly one-quarter of its components are still at least 20% from 52-week highs even as the underlying index has hit fresh all-time peaks. Stocks like Macy's, Activision, Nvidia and FedEx are performing even worse, tumbling 30% or more from 52-week highs.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, warns not to get lured in by what appears like a discount.

"I would advise investors not to dive into the bargain bin at this point in the market cycle with valuations where they are and with the S&P 500 hitting higher highs," Morganlander said Wednesday on CNBC's "Trading Nation. "

The S&P 500 has surged 25% off a late December bottom and scored its best start to a year since 1987. It now trades at nearly 17 times forward earnings, up from a 14 times multiple at the beginning of the year.

"What I would suggest investors do is broaden out their investment thematic. Look at the dividend aristocrats index, for example," said Morganlander. "That's trading at a steeper discount in relationship to the S&P 500. You get consistent cash flow companies in that index, companies that have very little debt and also there's a chance for having income growth there."

The S&P dividend aristocrat ETF is up 12% this year, underperforming the S&P 500's 16% increase. The ETF's top components include high-dividend payers such as 3M, Coca-Cola, Colgate-Palmolive, Dover and Procter & Gamble.

"We think overall, over the next 12 to 18 months those types of companies, that type of thematic will perform well in relationship to the broader market indices," said Morganlander.

Some of the worst performers have held up in the face of sharp downturns, though, according to Bill Baruch, president of Blue Line Futures. Macy's, for example, has stayed above a support line more than a decade old.

"If you look at a trend line going back to 2008, it's been constructive and it's held it so on a longer-term basis there is value in the mid-$20s," Baruch said Wednesday on "Trading Nation." "But ultimately if you are buying down here, your time frame has to be long term because there is some very strong overhead resistance from the high of the year."

"I also want to focus on Nvidia which is well off its highs and really hasn't participated in a broader rally," said Baruch. "There is a gap from the Nov. 15 earnings and that right there is going to provide strong overhead resistance. It's had a good trend up until where it stalled near this gap."

Instead, Baruch said it's better to hedge your bets and spread risk across the semis space by looking to the SOXX semiconductor ETF. He sees more upside after the ETF broke above $200 in early April.

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