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Analyst Watch: Finding True Growth Companies

US stock index futures were down Monday, following the S&P's best week in a year and as investors awaited the unofficial start of earnings season with Alcoa's results later in the day.

Investors also remained concerned about Europe's fiscal issues and financial sector ahead of the "stress tests" put on the continent's banks. Over the weekend, a German magazine reported that the test included a haircut on German sovereign debt under certain conditions in its worst scenario.

While Alcoa, the first Dow component to report earnings, is expected to swing to a profit in its second quarter, analysts have been cutting their estimates for the firm due to falling aluminum prices. The results will be released after the market closes.

So how should you position yourself at the start of the week? Here's what guests on today's Squawk on the Street are watching before the opening bell:

Look for Growth

Jim Meyer, chief investment officer and co-founder of Tower Bridge Advisors, says you should consider investing in stocks that provide superior free cash flow and/or solid dividends. He likes companies that do a large percentage of business in areas of the world with superior growth prospects.

So which stocks does he consider true growth companies?

Colgate

Medtronic

CVS

Google

Meyer is avoiding companies that seem to need a strong economy to justify earnings estimates. For that reason, he is underweight energy, basic materials and consumer discretionary.

See more of what these and other analysts and money managers have to say, and get the latest financial news. Watch Squawk on the Street every weekday morning starting at 9 a.m. ET.

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Disclosure: Jim Meyer and/or his wife owns Colgate (CL) , Medtronic (MDT), CVS (CVS) and Google (GOOG). His firm does not own 1% positions in any stock mentioned.

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Disclaimer

Contact Squawk on the Street

  • Carl Quintanilla is an Emmy-winning reporter and co-anchor of CNBC's "Squawk on the Street," broadcast live from the NYSE.

  • Simon Hobbs co-anchors the 10 a.m. hour of CNBC's "Squawk on the Street" live from the New York Stock Exchange.

  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

  • “Squawk on the Street” Co-Anchor

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.