BOSTON (TheStreet) -- It's not too early for investors to start putting money in European stocks as the values of some of the continent's biggest high-quality companies are trading at valuations much cheaper than those of their U.S. peers.
The interminable sovereign debt crisis is dragging on and has weighed on the MSCI Europe Index, which tracks large-cap stocks. It's down 8.5% this year and 27% over the past 12 months.
And that has hurt share prices across the board. But the prospects for some European-based companies are strong as they continue to make money and are sure to survive a reshuffle of the euro.
What's more, some of them are paying hefty dividends and their revenue base includes such a large component of international sales that the playing field is leveled with their U.S.-based peers.For example, the Swiss drug giant Novartis (NVS), with a 4.82% dividend yield, has a forward price-to-earnings ratio of 9.2 on projected earnings of $3.58 per share this year, while its U.S.-based health care products competitor Johnson & Johnson (JNJ), with a 3.92% dividend yield, has a forward P/E of 11.5 on projected earnings of $3.69 per share this year. The S&P 500 currently has a forward P/E of 12.9 and has gained 3.2% this year. As a basis for comparison, U.S. international industrial conglomerate General Electric (GE) has a forward P/E ratio of 10.2% and a dividend yield of 3.73%, while its shares have gained 2.8% this year. One way to come up with solid stock ideas is to check out what the smart guys are buying by reviewing the holdings of the top international mutual funds. The Tweedy Browne Global Value fund (TBGVX), up about 1% this year, favors the world's largest food and beverage company in consumer staples leviathan Nestle (NSRGY), making the Swiss firm its top stock pick at 4.2% of the highly rated $4.6 billion fund. And the $7.5 billion Oakmark International I Fund (OAKIX) has the international financial services firm Credit Suisse Group (CSGN) as its top pick at 4.2% of the fund, although it's shares are off about 16% this year. Here are eight European-based company stocks of high-quality companies with strong dividends that are trading cheaply based on their price-to-earnings ratio versus their peers, arranged in inverse order of the number of analysts' "buy" ratings:
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV