There’s more to Europe than history, travel and food. The continent is home to many of the world’s leading companies, some of which dominate their respective sector. While investors might know the names of the best European stocks, chances are they do not know the breadth and impact of many European-based companies, or the benefits of owning their shares.

Holding shares of major European concerns can help to diversify a portfolio and lessen the reliance on U.S.-based stocks. This diversification can be helpful during a market downturn such as the one we are experiencing this year, with both the S&P 500 and Nasdaq composite in a bear market. Many European stocks also have a solid record of delivering decent returns to investors, along with favorable dividends.

And, perhaps best of all, many European stocks are undervalued, presenting an attractive buying opportunity. Here are four of the best European stocks to buy now.

Best European Stocks: Volkswagen (VWAGY)

German automaker Volkswagen (OTCMKTS:VWAGY) is well-known throughout the world. However, while investors might be familiar with the “VW” logo, many do not known the size and scope of Volkswagen today. The company based in Wolfsburg, Germany is a lot more today than its Jetta and Passat vehicles. The modern Volkswagen is a multinational automotive powerhouse that owns many of the top vehicle brands in the world, including Audi, Bentley, Lamborghini, Porsche, and Ducati. It is the second-biggest automaker in the world after Toyota (NYSE:TM).

Volkswagen is also the leader in Europe when it comes to pushing into electric vehicles. The company just announced that it is investing $20 billion to build its own electric vehicle batteries. In total, Volkswagen is spending $84 billion to bring 300 electric vehicle models to market by 2030 across all of its automotive brands. The company is aiming to take on all comers in the electric vehicle space, from Tesla (NASDAQ:TSLA) to Ford Motor Co. (NYSE:F). And the company seems to have the resources and resolve to pull it off. Year to date, Volkswagen stock is down 36%. 

SAP (SAP)

Investors looking for a strong European technology company should check out SAP (NYSE:SAP). Based in Waldorf, Germany, SAP is the biggest non-American software company, the world’s fourth-largest publicly traded software company, and the second-largest German company by market capitalization. With more than 100,000 employees and annual revenues of $28 billion, SAP is a leader in the European technology sector and offers investors a stable foreign holding for their portfolio.

In the past decade, SAP stock has delivered a 72% return to shareholders. However, the company’s track record has been less impressive during the last five years when it has declined 16%. Despite the weak performance, the stock looks to be slightly undervalued right now with a price-earnings ratio of 20.8. Shareholders also benefit from a reliable dividend that currently yields 2.3%, or a quarterly payout of 52 cents per share.

The median price target on SAP stock is currently $127 a share, implying 44% upside from current levels.

Nestle (NSRGY)

Based in Switzerland, Nestle (OTCMKTS:NSRGY) is the biggest food company in the world. The conglomerate makes everything from baby formula and bottled water to candy and pet food. Some of its best-known brands include Smarties, Nesquik, Vittel and Nespresso. Nestle is also a major shareholder of L’Oreal, the world’s biggest cosmetics company. Nestle has been a going concern since 1905 and is one of the top-performing companies in all of Europe, with more than 275,000 employees and annual revenues of nearly $90 billion.

NESN stock is down about 16% so far this year, but over the past five years, the stock has gained 35%, and it has doubled in the last decade. The company has a relatively low P/E ratio of 19 and provides a dividend that yields 2.5%, which is good for a quarterly payment of 72 cents a share. The consensus view of analysts is for Nestle’s share price to gain 14% over the next 12 months.

Best European Stocks: Airbus (EADSY)

There are only two companies in the world that make commercial airplanes. One of them is U.S.-based Boeing (NYSE:BA), and the other is Europe’s Airbus (OTCMKTS:EADSY). Together, Boeing and Airbus have a duopoly over commercial aircraft manufacturing. However, Airbus, which is based in Leiden, Netherlands, has not had to contend with the faulty manufacturing, deadly crashes, and government sanctions that have plagued Boeing in recent years. Owing to Boeing’s diminished fortunes, Airbus surpassed it in 2019 to become the world’s largest aircraft manufacturer with more than 125,000 employees and annual revenues in excess of $50 billion.

Airbus continues to thrive, having secured major orders from multiple airlines and governments around the world coming out of the Covid-19 pandemic. The European aerospace giant recently secured an order for 300 of its Airbus jets from China’s big three state-owned airlines – Air China, China Southern Airlines, and China Eastern Airlines. Together, the three Chinese airlines will pay Airbus more than $25 billion for the aircraft order. As is always the case, Airbus beat out Boeing to win the Chinese jet contract. Currently, Airbus stock has a relatively low P/E ratio of 15.5 and offers a dividend that yields 1.5%.

So far this year, AIR stock has dropped 18%. However, the company’s share price is up nearly 30% over the past five years. The consensus view among 17 analysts who cover Airbus is that it share price should increase 62% over the next 12 months.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.