With the eurozone still undergoing various debt problems and austerity measures taking hold in such countries as Ireland (NYSE:EIRL) and Spain (NYSE:EWP), Europe has not been an ideal investment destination over the past few months. However, the weakness in the euro currency has created a few spots. Nations that rely on exports have been thriving in the lower euro environment. One in particular, could power portfolios for years to come.

IN PICTURES: Top 6 Most Tradable Currency Pairs

The Fourth Largest Economy
While much press has been given to China moving up the economic ladder, solidly in the number fourth spot overall and Europe's largest, Germany has quietly become an export giant. Recent data from the Germany's Federal Statistics Bureau shows that exports have grown at a 30% rate versus a year ago. The nation owes much of this growth to emerging markets which covet Germany's sound reengineering. German industrial goods, chemicals and infrastructure products are finding their way to Latin America and parts of Asia. Growing middle classes in China and India have created a surge in demand for German luxury automobiles. Sales of luxury Mercedes to China have tripled over the course of the year; sales to India more than doubled. This rise in export-driven growth has lowered unemployment in the nation in contrast to the rest of the eurozone and the United States. Unemployment in Germany is now lower than it was when the crisis began.

Overall, the German economy grew by 2.2% in the quarter ending in June. This is the best performance since Germany was brought together via the fall of the Berlin Wall. This quarterly figure dwarfed the most bullish analyst forecasts. Keeping with its fiscally sound principals, its government has reduced its budget deficit by 20%, which stands at 65 billion euros or $81 billion. On a debt-to-GDP basis that is far less than the United States, U.K. and Japan.

Deutschland Funds
Aside for the recent short-term catalysts, investors may want to add a touch of German stocks for the long term. Germany has traditionally outperformed the other big boy on the block, the United Kingdom (NYSE:EWU). The annual average five-year return for German stocks was 5.28%, compared to negative 2.28% for the U.K.

The easiest way to add the German economy to a portfolio is through the iShares MSCI Germany Index (NYSE:EWG). With more and more of the nation's ADRs moving to the pink sheets, this ETF gives access to such companies as steel maker ThyssenKrupp or utility E.ON AG, which no longer trade on the big boards. The ETF follows 51 of the largest German companies and charges 0.55% in expenses. Shares of the ETF yield 1.45%. Focusing on small- and mid-cap German equities, the closed-ended New Germany Fund (NYSE:GF) offers a way to play the faster moving stocks within the nation. The New Germany Fund currently trades at a 9% discount to its NAV.

German Equities
There are only a handful of German equities remaining that have dual listings on the NYSE or Nasdaq exchanges. Most have chosen to relocate to the pink sheets where expenses are much lower. However, the remaining are some of the biggest companies in their fields. Siemens AG (NYSE:SI) represents one of the largest electrical and engineering firms on the planet, with operations in infrastructure, healthcare and electronics.
Oracle (NASDAQ:ORCL) rival SAP AG (NYSE:SAP) is number two in productivity and data mining software. Finally, Fresenius Medical (NYSE:FMS) is one of the leading operators of global dialysis centers. (For more on Fresenius Medical, Please See Investing for the Diabetes Epidemic.)

Bottom Line
With Europe still going throw is austerity pains, some nations are shaping up to be better buys than others. As one of the top exporters of capital and industrial goods, Germany should be on investor's radar. The nation has thrived during the recent debt crisis and with a falling euro, has positioned itself as the leader in Europe. Investors may want to consider adding Germany through any of the ETFs or individual stocks previously mentioned. In addition, the strength of Germany is helping power broad eurozone ETFs such as the SPDR DJ EURO STOXX 50 (NYSE:FEZ) from their lows. (To learn more, see The German ILO: Why It Matters To Traders.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    Comparing ETFs Vs. Mutual Funds For Tax Efficiency

    Explore a comparison of mutual funds and exchange-traded funds, or ETFs, and learn what makes ETFs a significantly more tax-efficient investment.
  2. Mutual Funds & ETFs

    ETF Analysis: Vanguard Small-Cap Value

    Find out about the Vanguard Small-Cap Value ETF, and explore detailed analysis of its characteristics, suitability, recommendations and historical statistics.
  3. Mutual Funds & ETFs

    ETF Analysis: Vanguard Intermediate-Term Corp Bd

    Learn about the Vanguard Intermediate-Term Corporate Bond ETF, and explore detailed analysis of the fund's characteristics, risks and historical statistics.
  4. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares 10-20 Year Treasury Bond

    Learn about the iShares 1-20 Year Treasury Bond ETF and its holdings, and understand why investors may be better served to look at other bond funds.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares Global Telecom

    Learn about the iShares Global Telecom exchange-traded fund, which invests in U.S. and foreign telecommunication companies with high dividend yields.
  7. Chart Advisor

    Gold Struggles to Climb Higher and May Fall Soon

    Traders will be watching the price of gold over the coming weeks. We'll take a look at how a couple major moving averages are suggesting that the next move could be lower.
  8. Mutual Funds & ETFs

    ETF Analysis: United States Brent Oil Fund

    Learn more about the United States Brent Oil exchange-traded fund, the characteristics of the fund and the suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Bloomberg Crude Oil

    Find out more about the ProShares Ultra Bloomberg Crude Oil ETF, the characteristics of UCO and the suitability and recommendations of UCO for investors.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Hong Kong

    Learn about the iShares MSCI Hong Kong fund, which invests in various equities of companies listed on the Hong Kong Stock Exchange.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  4. Optimal Currency Area

    The geographic area in which a single currency would create the ...
  5. European Sovereign Debt Crisis

    A period of time in which several European countries faced the ...
  6. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!