I am starting to allocate an increasing amount of non-deployed cash into European equities. The U.S. market, I believe, is fully valued at these levels after an almost 20% gain so far in 2013. I don't appear to be alone in this belief, either, judging from the robust initial-public-offering activity that's in the pipeline. More important, Europe seems to be finally on the verge of turning a corner after almost two years of contraction. The European purchasing managers index is now above the breakeven 50 level for the first time in a year and a half, indicating expansion. In addition, eurozone unemployment dropped for the first time in two years in July. These are just two signs that Europe is starting to slowly turn around. Given that the overall European market has underperformed the U.S. market by more than 25% over the past two years, "less bad" could be "good enough." So I am slowly easing back onto the continent, as I'm looking at a bevy of bargains if this is indeed the turn. Here are two European equities that I like at current levels. Vodafone ( VOD) is one of the major telecom players in the world, and it serves some 400 million customers. I have owned the shares since they were priced in the mid-$20s, and they now trade at $31 a share. The company's main asset is its 45% stake in Verizon ( VZ) Wireless, representing more than 50% of Vodafone's total market value. Verizon has expressed interest in buying this out for $100 billion, and Vodafone is holding out for around $130 billion. I think this will get resolved eventually for somewhere in between these two numbers. In the meantime, an investor would get about a 5% dividend yield as they wait for this transaction to be initiated and completed. Among the company's other assets is its huge customer base in Europe, which provides some 70% of the company's revenue. Obviously an improving economy on the continent would buoy Vodafone's prospects substantially. The company also has a strong foothold in emerging markets in Africa, Asia and the Middle East, and that should lead to future growth. Shares are not expensive, either: They trade at 11x this year's expected earnings, and consensus earnings estimates for fiscal 2014 (ending March 2014) have been rising nicely of late.