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Analyst Watch: Stocks For a Strong Second Half

U.S. stock index futures pointed to a higher open Thursday after a testimony by Federal Reserve Chairman Ben Bernanke spooked investors and pushed the major indexes lower in the previous session.

Bernanke gave investors reason to question the strength of the economic recovery Wednesday when he described the outlook as "unusually uncertain."

Here's what guests on today's Squawk on the Street are watching before the opening bell:

Bill Smead, CEO and CIO at Smead Capital Management, says he is very bullish on the markets in the long-term.

"We believe we'll see a strong market in the second half of the year," he says.

So what are his favorite stocks?

eBay because it sells at 10 P/E net of cash with $2 billion of annual free cash flow.

Walgreen because new generic drugs drive traffic for at least the next 2 years. 12 P/E on 2011 earnings. Gushes over $2 billion annually in free cash flow. Raised their dividend 27% last week.

Amgen because their newest medicine Prolia will get approval for slowing the growth of breast, prostate and lung cancer tumors on top of being the most effective osteoporosis drug that’s ever been invented. Massive free cash flow, an 11 P/E and $4 billion stock buy back presently in the stock.

Smead is avoiding long-term treasury bonds.

"We believe this is the single worst time to buy long-term treasury bonds in the last 30 years. It’s the antithesis of 1981," he says.

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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  • 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.