Image: Europe © Photodisc, SuperStock

When images of violent protests in Spain and Greece hit TV screens again last week, they reminded us that Europe was still a long way from resolving its problems -- despite the relative calm of recent months.

Sure, there's still a sense of relief in the air -- as reflected in Monday's rally -- thanks to European Central Bank chief Mario Draghi's pledge to do "whatever it takes" to save the euro. Chiefly, this will mean centralized European purchases of debt issued by the shakier countries to keep their bonds from blowing up.

But here's the problem -- which has had investors fleeing Europe and has created a good buying opportunity in the now low-priced stocks of European companies: Any centralized bond purchases will come with conditions. The governments of troubled countries like Italy, Spain and Greece have to impose austerity in government spending and make labor-market reforms to improve their creditworthiness and competitiveness.

These reforms will continue to spark protests -- and that will continue to worry investors. After all, protesters may prevail and push back on reform so successfully that the eurozone falls apart. That would be terrible news for the economy and for most European stocks.

But this meltdown scenario won't play out, because it's ultimately in the interest of European countries to maintain the union -- and they know it.

Image: Michael Brush

Michael Brush

"Europeans want to be together," says Chad Deakins, the portfolio manager of the RidgeWorth InternationalEquity Fund (STITX). "They recognize they need each other to compete as a global trading bloc against the U.S. and China." Together, Europe's gross domestic product is 85% of U.S. GDP. "Divided, they don't have much critical mass."

If he's right -- and I think he is -- that makes European stocks a classic contrarian play right now: Buy on the protests, collect on the peace. Here's why, and what you might invest in now.

Priced for nervousness

Many European stocks look downright cheap right now. Collectively, they trade for around 12 times earnings, compared with 14.6 times earnings for U.S. stocks, says Deakins.

And no, it's not 100% clear that Europe will get out of its mess. But with contrarian investing, it's never 100% clear you're right until after the fact -- and then it's too late to act, says Ramond Vars of the NorthRoad International Y Fund (NRIEX), which gets Morningstar's top, five-star rating and which is heavily overweight Europe right now.

"We are concerned, but that fear is what gives us the value opportunity," says Vars. "We are finding great global businesses that are undervalued compared to their peers around the world. We think Europeans will muddle through and do what they have to do."

One great way to invest in this theme, says Deakins: Go with European companies whose stocks are suppressed because of their European addresses, even though they do much of their business elsewhere in the world.

Portfolio managers at NorthRoad International agree with this approach, and you can see it in their fund's profile. Three-fourths of the fund is in Europe-based companies, but just 31% of the sales made by the companies it owns are collected in that region.

Now let's take a look at several stocks favored by fund managers bullish on Europe. Most of these are American depositary receipts, or bank-issued certificates that represent the shares of companies on foreign exchanges. They trade like U.S. stocks.

1. Nestlé

Based in Switzerland, Nestlé (NSRGY) seems like a quintessentially European company. So, naturally, investors are worried that austerity measures and the uncertain economic outlook there will weigh on Nestlé's results, and its stock, as consumers trim spending.

But Nestlé has a huge global distribution platform -- so big that it is the largest packaged food and beverage company in the world, by sales. It's a key supplier to many grocery chains, even here in the U.S. You're no doubt familiar with its Nescafé coffee. But Nestlé is also the company behind Poland Spring and Perrier bottled water, prepared foods sold under the Hot Pockets, Lean Cuisine and Stouffer's brands, Coffee-Mate nondairy creamer, Kit Kat candies, and even pet foods like Friskies and Purina.

Nestlé boasts such powerful brands, pricing power and marketing savvy that it has been able to generate nice sales growth even through the difficult times of the past few years, says Vars, of the.

More important for investors, Nestlé has a big presence in faster-growing emerging markets, which account for about 40% of sales. Nestlé recently predicted that by 2020 it can triple sales in Asia and Africa, where it is already the largest food company. Nestlé so much solid financial strength it can borrow at rates below those paid by many governments and use those funds -- plus its sizable cash flow -- to reinvest in great businesses around the world "regardless of what happens in Europe," says Vars.

So its forecast of 5% to 6% annual sales growth seems believable. "We believe it could surprise on the upside over the medium term," says Morgan Stanley analyst Eileen Khoo, who has an overweight rating on the stock.