Just when you think it can't get any lower, it does.

No, not the

Nasdaq

. The euro, the pan-European currency, that has been sinking, as

Jimmy Page

might say, like a lead zeppelin.

On Tuesday, the euro reached a record low of 93 cents. That's 20% below its value 15 months ago, when it made its splashy debut. The currency's decline seems to have hurt European pride a bit; when it first appeared the papers were rife with speculation it would replace the dollar as the world's most important monetary unit. Almost no one thought it would fall this far, this fast.

Wounded European pride, however, is not cause for American gloating. It is cause for buying.

As anyone who travels to a foreign country knows, when the local currency declines in value, you get more bang for your bucks, or at least more chianti at the trattoria. Likewise, a low euro translates for U.S. investors into cheaper prices for European stocks.

"It's just dirt cheap right now," says Holger Schmieding, chief European economist for

Merrill Lynch

, based in London, of the euro. "European fundamentals do not indicate anything has gone so badly that could justify the selloff of the euro."

Schmieding argues the decline in the euro is less a sign of a fundamental weakness in the European economy, as it is of the overwhelming strength in the U.S. economy. "The strength of the U.S. economy just overwhelms everything else," he says.

That may soon change.

When the U.S. economy slows, something the

Federal Reserve

's interest rate hikes are intended to cause, the euro will likely turn around, a number of analysts say. That could happen sometime this summer, driving up demand for euros and driving down the value of the dollar.

The case for buying Europe is not based solely on the value of the euro. The weak currency is just a lucky discount. Instead, it is based on fundamentals: growing economies, declining unemployment, economic reforms and strong growth in consumer demand.

Of course, a low euro has also meant declines in value for U.S. investors who bought positions in European stocks before the euro's fall. In other words, subtract 20% from the stocks' performance during that period. This is a good example of why currency fluctuations are part of the inherent risk of investing in overseas markets.

If the euro continues to decline, then investors who get in now will take a hit.

But while the U.S. seems to be nearing the end of an economic cycle -- hopefully with a soft landing -- Europe is on an economic upswing.

"Indices in Europe are just starting to do what they've done the last five or ten years in the U.S.," says Paul O'Connor, an equity strategist with

Credit Suisse First Boston

in London. The brightening picture in European bourses is behind an overall bullishness among analysts toward Europe you find these days -- and the strong rise in mutual fund investing in European companies. The

(MEUEX)

Morgan Grenfell Deutsche European Equity fund, for example, is the best-performing fund this year with an 88.6% increase in value.

(IEOAX)

The Ivy Fund European Opportunities Fund is up 31% year to date. The

(PEAGX)

Payden and Rygel is up 17.6% this year, while the

(FEMAX)

Flag Investors Mid Cap European fund is up 16.3%.

Many European companies listing in the U.S., either directly or through American Depositary Receipts, have performed strongly as well. Finnish cell-phone manufacturer

Nokia

(NOK) - Get Report

has more than doubled since last fall, despite a recent dip.

Glaxo Wellcome

(GLX)

has climbed 51% since mid-February.

To be sure, other European funds have crept into negative territory the last few weeks following the U.S. market. And Europe's picture will be distinctly less bright if the soft landing in the U.S. is not so soft.

Thus, some analysts, like O'Connor, are cautious. "It is a good time to be thinking of Europe," he says. "But it's a good time to be cautious about equities overall." He is particularly wary of the TMT, or technology, media and telecommunications, stocks for the time being.

Nevertheless, O'Connor takes the droll view. "The imponderables in Europe are quite small, while the imponderables in the U.S. are quite massive," he says.

European stocks will most likely be more expensive in the months ahead as the euro reverses its decline.

David Kurapka's Global Portfolio column appears Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

dkurapka@thestreet.com.