Stodgy. That's how I used to think of European stocks, what with Europe's aging population, constant labor issues, and historically anemic GDP growth. I used to prefer the higher-growth regions of Asia and South America.

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 that hit the market in 2002 is near its highest level ever against the dollar and the yen. Former Soviet-bloc countries such as 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 of the U.S. and Japan in 2007 and 2008.

This growth is reflected in European stocks. The Vanguard European Stock Index Fund (VEURX), for instance, with top holdings in BP (NYSE: BP) and HSBC (NYSE: HBC), is up 170% since December 2002 -- thoroughly outpacing the U.S.-focused Vanguard 500 Index, which has risen 81%.

Of the more than 79,000 investors participating in Motley Fool CAPS, the Fool's free investor-intelligence community, many have also noted the promise in Europe. Here are this month's top five European stocks, as rated by CAPS participants:

Company

Country

Industry

ICON (Nasdaq: ICLR)

Ireland

Research services

Aktieselskabet Dampskibsselskabet Torm

Denmark

Shipping

iShares MSCI Sweden Index

Sweden

N/A 

Norsk Hydro (OTC BB: NHYDY.PK)

Norway

Aluminum and energy 

iShares MSCI Netherlands Index

Netherlands

N/A 

Source: Motley Fool CAPS;  N/A = not applicable.

Please bear in mind that these stocks are not formal recommendations. Instead, they're offered as jumping-off points for further research -- and, what's more, researching five-star CAPS stocks such as these has proven to be an effective tool for investors.

Scandinavian bulls
Three of this month's top five European investments hail from Denmark, Sweden, and Norway -- not exactly countries an investor typically associates with hot growth. After all, they are known for extremely high personal income taxes that fund extensive social welfare programs, but they're also perennially voted to be some of the best places in the world to live.

The socialist-leaning Scandinavian economic system sure didn't stop Nasdaq (Nasdaq: NDAQ) from pursuing OMX, the Swedish stock exchange, this past fall. The deal will give Nasdaq a European stronghold to compete with NYSE Euronext (NYSE: NYX) as the global markets converge.  

Norsk Hydro, a Motley Fool Income Investor choice, gets a lot of investors' support on CAPS because of its hand in aluminum as well as as alternative energies, such as hydro- and wind power. The logic is that Norsk benefits twice if traditional energy prices rise: Not only does it make out on high oil and gas prices, but it also capitalizes on the increasing need for cheaper alternatives.

What do you think? Will Scandinavian markets roar, or will winter be especially cold on the North Sea? Make your voice heard about these stocks -- or any stock, for that matter -- on Motley Fool CAPS. To get started, just click here.

Motley Fool Global Gains is here to help you navigate the complex international stock markets. 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. Nasdaq is an Inside Value pick, and NYSE Euronext is a Rule Breakers choice. The Fool's disclosure policy backpacked across Europe after college and returned with its integrity intact.