Bank of Ireland (ADR) (IRE), Orange SA (ADR) (ORAN): Is It Time to Trust Europe Again?

Still, the company will only be able to stage a turnaround if the economic situation in Europe improves and a brutal price war is currently underway. That said, Orange SA (ADR) (NYSE:ORAN) has operations throughout Europe, including the UK, and the growth of mobile 4G usage will hold the company together until Europe starts to grow again.

Trading at a discount to book value and with a higher-than-average dividend yield, Orange SA (ADR) (NYSE:ORAN) could be a good risk to take.

Germany

Of course the strongest economy in the euro zone is Germany and there are a few opportunities in the market that offer some real value.

One such company is Wacker Neuson (NASDAQOTH:WKRCF), a producer of construction and industrial equipment. Although now may not be the perfect time to buy the stock due to the slowdown in European construction activity, the company does offer some real value.

Book value stands at $17.20 per share and current assets of euro 612 million more than cover total liabilities of euro 482 million. In addition, the company’s current ratio stands at just under 3x.  Wacker offers investors a 2.9% dividend yield so a buy and hold strategy will give investors an above-market yield.

Wacker had a poor first quarter with revenue falling 6.2%, however, management remains confident and have stated that they expect sales to pick up through the rest of the year and full-year revenue should come in at euro 1.2 billion, up 10% from euro 1.1 billion reported for 2012. Management also expects the EBITDA margin to expand beyond the level of 13% seen in 2012.

As Caterpillar is a play on the global economic recovery, Wacker is a solid value play on the European recovery.

Foolish summary

All in all, Europe is showing some signs of recovery and these three companies have the potential for good profits when the turnaround gets fully underway. Moreover, each company has a solid, individual reason for investment that makes it independent of the wider market. The Bank of Ireland (ADR) (NYSE:IRE) offers a turnaround play on the Irish economic recovery. Orange SA (ADR) (NYSE:ORAN) offers a play on the beaten-down but relatively defensive telecoms market; and Wacker offers a value play in a disliked sector.

The article Is It Time to Trust Europe Again? originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends Orange (ADR). Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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