NEW YORK (TheStreet) -- European stocks have inspired little enthusiasm lately.

Investors worry about sluggish economic growth and debt problems in Greece. But some fund managers argue that the European markets now sell at bargain levels. The price-to-earnings ratio for European stock funds is 11.7, compared with 15.9 for U.S. domestic funds and 15.2 for Asian funds, according to Morningstar.

"Europe is selling at a 30% discount to other regions," says Andrew Pringle, a manager at AIM International Growth ( AIIEX).

Francis Claro, a manager at Evergreen Global Opportunities ( EKGAX), says concerns about the stability of European governments are exaggerated. The debt problems are manageable, he says. Germany is determined to support Greece, and the Greek government is willing to undergo painful belt-tightening, even if that provokes street demonstrations. "The Europeans will do whatever it takes to avoid defaults," Claro says.

To be sure, Europe faces serious problems. The European Commission forecasts that the euro-zone economies will grow only 0.7% this year. Retail sales remain weak as pinched consumers watch their wallets. Still, fund managers say some companies should report solid results by focusing on expanding niches or exporting to fast-growing regions in Asia and Latin America.

Alec Walsh, manager of Harding Loevner International Equity ( HLMIX), says he has a heavy weighting in Europe because many companies in the region are champion exporters. Walsh seeks stocks with high returns on equity and solid growth prospects.

A favorite holding is Autonomy ( AU.L), a U.K. software producer that increased revenue by 47% in 2009. The company specializes in search engines that enable large corporations to sort through all their in-house information sources, including e-mails and videos.

A strong exporter is Swatch Group ( UHRN), the Swiss maker of Omega watches and other high-end brands. Sales dipped last year as the recession took a toll, but Walsh expects the company to grow as the global economy expands. "Wealthy people around the world want expensive watches," he says.

Pringle of AIM International Growth prefers high-quality growth companies selling at reasonable valuations. A favorite holding is Sonova ( SOON.SW), a Swiss company that's a dominant maker of hearing aids. The company has a long track record for increasing sales and earnings. With sales soaring in Asia, Sonova expects to increase its revenue by 17% for the current fiscal year.

Pringle also likes Reckitt Benckiser ( RKBKF.PK), a U.K. maker of consumer staples, including Clearasil skin products and Lysol cleaners. Throughout the recession, the company's revenue has grown, rising 18% last year.

While European domestic sales should remain weak this year, some managers argue that the pessimistic outlook provides opportunities for bottom fishing. Claro of Evergreen has been buying U.K. housing stocks. Those collapsed after residential prices sank and homebuilders recorded big losses. Now he says housing prices are starting to rise, and the volume of mortgage approvals has hit bottom.

To capitalize on the rebound, Claro owns Bovis Homes ( BVS), a builder that sells for less than its book value.

Claro also sees the beginnings of a turnaround coming for companies that provide temporary staffing. Although earnings of the companies aren't yet improving, demand for temporary employees is beginning to climb. "The situation is becoming less bad," Claro says.

To bet on a revival, he has bought USG People ( USG), a Dutch temporary-staffing company. Claro says the staffing business should grow as cautious companies replace full-time employees with temps.

David Marcus, chief investment officer of Evermore Global Value ( EVGBX), sees opportunities in efforts of European companies to cut costs and restructure. "Companies are using the crisis to transform themselves," Marcus says. "They are streamlining to the point where the cost structures will come down dramatically."

Marcus likes Siemens ( SI), the German industrial conglomerate that provides technology for factory automation and wind power. The company has been reducing costs by cutting deals with unions and expanding production outside Europe. Marcus figures the company sells at a 40% discount to its fair value.

Marcus also owns RHJ International ( RHJI), a Brussels-based holding company that's buying up troubled financial companies around Europe. The company recently bought Kleinwort Benson, an old-line U.K. private bank.

"They are buying things at unbelievably low prices," Marcus says.

Stan Luxenberg is a freelance writer who specializes in mutual funds and investing. He was formerly executive editor of Individual Investor magazine.

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