European Stocks: A Better Buy Than the Dow Right Now?

The U.S. stock market has hit new highs lately, with the Dow Jones Industrials (DJINDICES: ^DJI  ) now sitting just below its all-time record levels. But some investors believe that the Dow has gotten overvalued. With that in mind, could European stocks be a better choice for value-conscious investors?

In the following video, host Alison Southwick interviews Dan Caplinger, The Motley Fool's director of investment planning, to learn more about European stocks. Dan notes that Europe underperformed during the early part of the year on concerns about recessionary conditions for its economy, but recently, it has bounced back, with the Vanguard Europe ETF (NYSEMKT: VGK  ) actually having outperformed the Dow so far in 2013. Dan points to two factors helping stocks in Europe: signs of economic recovery in some of the weakest areas of the eurozone, and increased financial stability that have bolstered confidence in the economic system governing Europe.

Dan discusses two stocks, Spanish telecom Telefonica (NYSE: TEF  ) and Irish financial giant Bank of Ireland (NYSE: IRE  ) , as examples of companies that have posted big gains because of these favorable factors. Dan concludes that because Europe is earlier in its recovery cycle than the U.S., European stocks could have further to run than the Dow.

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