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Just as economists are becoming slightly more optimistic about the euro zone, stock market strategists are also starting to take notice that the sovereign debt crisis and ongoing recession are not the threats they once were.

But what is the better bet – a play on U.S. multinationals with heavy European exposure, or a direct bet on Europe itself?

Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, can see the upside to big U.S.-based companies: "Europe looks to be in recovery mode, which bodes well for U.S. stocks with European exposure – another reason to prefer multinationals over domestics," she said in a note.

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She offered no other details, but this view marks an abrupt shift in attitude toward Europe, for sure.

During the region's worst days, when the currency's future was called into question along with the membership of several euro zone countries, investors were looking at how to reduce their exposure – and they gave European sales among U.S.-based multinationals a close examination.

In 2010, Tobias Levkovich, chief U.S. equity strategist at Citigroup, looked at which parts of the S&P 500 were most exposed to Europe. He found that consumer discretionary stocks, health-care stocks, financials and information technology stocks had the greatest exposure, ranging between 14 per cent and 18 per cent of sales.

More specifically (and keep in mind that these are 2010 numbers), he found that Philip Morris International Inc., McDonald's Corp., Dow Chemical and Ford Motor Co. had European revenue exposure ranging between 34 per cent and 68 per cent.

Three years ago, high exposure to Europe meant big worries; now, it means big opportunity. As Europe recovers, the idea goes, these multinationals will perform particularly well.

Hey, a recovering Europe can't hurt U.S.-based multinationals. But as a play on beaten-up Europe on the verge of recovery, a direct investment in the region looks like the better way to go.

The MSCI Europe index has rallied 35 per cent over the past two years, making the recovery-bet look a tad stale. But the index is still 25 per cent below its pre-financial crisis high in 2007, implying that there is still lots of recovering ahead, and it offers an attractive dividend yield of about 3.6 per cent.

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The problem with U.S.-based multinationals is that many of them were hardly flustered during Europe's darkest days, despite facing potentially catastrophic setbacks if the worst-case scenario – the euro dies as a currency – unfolded.

The fact is, multinationals are exposed to many other parts of the world, including Asia. Europe was not seen as a big growth opportunity anyway, given its aging population and lacklustre economic performance even during the best of times.

Consider that Philip Morris, the international tobacco operations spun off from Altria Group Inc., has risen 36 per cent over the past two years and the share price continued to rise through some of the worst flareups of Europe's sovereign debt crisis.

McDonald's has risen just 12 per cent over the past two years, but it's hard to see this stock as a play on Europe. It hit a record high as recently as April, and is largely seen as an ideal way to gain exposure to rising domestic consumption in China.

For sure, multinationals have their advantages. Their global footprint gives investors the upside of fast-growing economies and their massive size provides downside protection from local economic mishaps.

But if you want exposure to Europe as the region shows early signs of emerging from six consecutive quarters of shrinking economic activity, the simplest approach works best: Buy European stocks.

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