Europe is on sale.

A friend of mine left this week for Paris and a charming Left Bank hotel for less than $200 a night. A quick glance at some Internet travel sites indicated a slew of bargains, including cruises of the Greek isles for travelers who want to contribute to the country's struggling economy.

With the euro worth about $1.23, it might be time to book a long-delayed visit to a euro-zone country. But it s not only hotels and restaurants that are attractively priced. Everything priced in euros is cheaper than it was as long as a buyer is paying in a currency that has appreciated against the euro. That s not just dollars, especially since China said over the weekend that it would allow the yuan to appreciate.

That should be terrific news for European exporters of everything from autos, steel, drugs and machine tools to wine and luxury goods. Many commentators have lamented that euro-zone countries like Greece and Portugal can t devalue their currencies because they use the euro. But their currency has been devalued pretty substantially. It s just that Germany's and France s have been, too.

Many of Europe s biggest exporters are concentrated in Germany (and, to a lesser extent France). A surge in exports should help buffer Europe from the consequences of budget cuts and austerity measures now under way as result of the Greek crisis. Domestic consumption is likely to suffer as Europeans curb spending. But longer term, Europe s economies should benefit. Worker benefits are being reduced and retirement ages raised, which should boost productivity and reduce deficits.

European stocks also look cheap. At the end of last week the average price-earnings ratio for stocks in the S&P 500 was 18.48. For the Stoxx Europe 600, it was just 14.72. And U.S. companies face the headwinds of a stronger dollar, a slow recovery and uncertain consumer confidence.

A major reason European stocks are cheap is continuing concern about the European sovereign debt crisis. But apart from the $1 trillion pledged to support Greek and other sovereign debt, the European Union seems to be addressing the underlying causes of structural deficits, with Germany leading the way. No country in the euro zone has actually defaulted, and Spain s recent debt offerings were warmly received. I was also encouraged last week when Europe said it would follow the U.S. s lead and administer stress tests to its largest banks. While a few may be forced to raise additional capital, the move is overdue and should help restore confidence in the banking sector as it did in the U.S.

In short, this strikes me as an unusually favorable opportunity to invest in European markets.

As I wrote last week, I ve been waiting for some good news for BP before selling my broad European exchange-traded fund, in which BP was the second-largest holding. In the meantime, I m increasing my allocation to Europe, specifically Germany, since it's the country most likely to benefit from the weak euro, as well as its own sound fiscal discipline and strong work ethic. To do this, I sold some U.S. stocks that I had bought to weather the downturn and that I believe have now served their purpose. I sold General Mills, Corinthian Colleges and CVS Caremark. I also sold Chevron on the theory that it will suffer from the post-spill regulatory environment brought on by BP s misfortunes.

I spread the proceeds between two German funds: the iShares MSCI Germany Index fund, an exchange-traded fund, and the New Germany fund, a closed-end fund. I also bought shares in the Mutual European fund.

The three funds offered a good mix of stocks likely to benefit from the trends I ve highlighted. The Germany index fund s top holdings included large exporters Siemens, BASF, Bayer, Daimler and SAP (as of May 28). There wasn t much overlap with the actively managed closed-end New Germany Fund. But its largest holding, Lanxess, is a specialty chemicals company, and 36% of the portfolio was in industrial companies (as of March 31), which is just what I was looking for. The largest holding in the broader Mutual European Fund was Switzerland s Schindler Group, which calls itself the world s largest supplier of escalators. But the fund also includes companies from the United Kingdom and other European markets.

France (and other European countries) also has its own ETF, the iShares MSCI France Index fund. Investors looking for individual stocks might want to consider French luxury goods purveyor LVMH, which I own and have previously recommended. It was also spotlighted in a recent Barron s cover story that recommended 10 large European exporters.