Stodgy. That's the first word that used to pop in my head when I envisioned European stocks. I thought of Europe's aging population, its constant labor issues, and its historically anemic GDP growth, and I opted to look at higher-growth regions.

But I've changed my opinion on European stocks in recent years. You may want to take a second look, too.

A breath of fresh air
A lot has changed in Europe over the past five years. The euro currency hit the market in 2002, and it's currently at its highest level against the dollar and yen. Former Soviet-bloc countries like Lithuania, Estonia, and Latvia joined the European Union in 2004. And pro-market leaders have been elected in Germany and France.

The trends are so positive, in fact, that The Economist expects GDP growth in Europe to surpass that in both America and Japan in 2007.

That growth has been reflected in European stocks. The Vanguard European Stock Index (VEURX), for instance, with top holdings in BP (NYSE:BP) and HSBC (NYSE:HBC), is up nearly 200% since July 2002 -- thoroughly outpacing the U.S.-based Vanguard 500 Index (VFINX), which has risen just more than 100%.

Investors participating in Motley Fool CAPS, the Fool's free investing community, have also noted of the promise of European markets. Here are the top 10 European stocks, as rated by more than 60,000 CAPS participants:



Telvent Git (NASDAQ:TLVT)


CGG Veritas




Bank of Ireland (NYSE:IRE)


Banco Santander Central Hispano


SGL Carbon


Luxottica (NYSE:LUX)


Chicago Bridge & Iron (NYSE:CBI)


Banco Bilbao


Alcon (NYSE:ACL)


Source: Motley Fool CAPS.

Please bear in mind that these stocks are not formal recommendations but are offered as jumping-off points for further research.

When Irish eyes are smiling
Perhaps the most phenomenal growth story outside Asia in recent years has been Ireland. For decades, Ireland was an economic failure, saddled with a trifecta of high unemployment, inflation, and taxes. But thanks to a highly educated workforce, low taxes, and inclusion in the EU, Ireland has turned into a model for rejuvenated economies around the world. In 2006, Ireland's GDP grew an astounding 6% while the ISEQ Overall Index grew 27%.

As you might imagine, Irish money centers have prospered during this economic upswing. The country's two largest banks, Bank of Ireland and Allied Irish Banks, are both up more than 100% over the past five years, and both post greater-than-3% dividend yields.

Over on Motley Fool CAPS, 119 of the 120 investors who have rated Bank of Ireland think it will outperform the market going forward. The bullish arguments on CAPS are generally centered on the bank's yield, earnings growth, and low valuations.

What do you think? Will Bank of Ireland beat the market going forward, or will it slow a bit? Make your voice heard on Bank of Ireland -- or any stock for that matter -- on Motley Fool CAPS, where 60,000 investors are waiting to hear from you. To get started just click here.

Allied Irish Banks is a Motley Fool Global Gains pick. A free 30-day trial to our international investing service is yours with just a few clicks.

Fool contributor Todd Wenning has long dreamed of playing lead guitar for Jesse & the Rippers. He owns shares of the Vanguard European Index ETF. The Fool's disclosure policy backpacked across Europe after college and returned with its integrity intact.