Believe it or not, the Standard & Poor's 500 Index has been soundly outperformed by many European equity markets. There are several reasons for this, including the euro's strengthening against the dollar. The flow of capital has been from U.S. dollars to the euro and then into European capital markets. This has been happening in spite of slow growth and high unemployment on the continent.

French utility company Suez SA (NYSE:SZE) may offer a way to benefit from what I think will be an ongoing trend. The company has two major divisions. Its energy division includes a 20% share of the Atlantic liquid natural gas market and is the 10th-largest producer of electricity in the world, and its environmental division provides water to 91 million people and sanitation services to 49 million people.

The company's numbers are mixed bag of good and bad but are improving overall. Earnings have been, and are estimated to continue, growing at a double-digit pace. Suez's biggest sources of revenue are Belgium and France. The company trades at 12 times 2005 earnings estimates. Suez does have net debt in the neighborhood of $17 billion, not small considering its market cap is $24 billion. But in the last two years, management has cut its debt in half and the company has $13 billion in cash, which equals about $13 per share. Other numbers such as price/sales (0.5) and return on equity (10%) are quite unremarkable relative to those of other European utilities such as E.ON AG (NYSE:EON) or Veolia Environment (NYSE:VE).

If Europe continues to outperform the U.S., I'd expect Suez to capture that benefit. There is one other piece of the story that makes Suez compelling: It has had a presence in China for more than 30 years. You no doubt are starting to now hear commentary that questions whether China will have economic problems because of trade, currency, and a lack of experience managing explosive growth. While that may or may not hurt Chinese stock markets, the country will continue to spend on modernization. This will benefit Suez. It has operations and customers all over eastern China, including Beijing, Shanghai, and Hong Kong. Beijing could be an especially important market as it gears up for the 2008 Olympics.

One last little nugget is its service to 500,000 people in Macau. Macau is a tourist destination, and the Chinese government is allowing the island to become the Las Vegas of China. Development in Macau is the biggest near-term catalyst that could help Suez.

While Europe does well and China develops, shareholders will collect a 3.3% dividend yield.

Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time neither he nor his clients owned any of the stocks mentioned.