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If you are a value or dividend investor, European stocks may look tempting. Trouble is, the European Union (EU) is at risk of breaking up. Who wants to invest in a region whose currency could go to zero?

But if the euro were to collapse and give way to national currencies, the German mark would end up higher than the euro exchange rate, according to a research note released Tuesday by Jens Nordvig of Nomura Securities. This suggests it may be OK to own or buy German equities now, especially given Germany’s cost and productivity advantages. A quick and easy way to gain exposure is through the iShares MSCI Germany Index Fund (NYSEARCA:EWG).

Other national currencies will end up below the euro, in Nordvig’s estimation. The worst case would be the Greek drachma, which should settle about 60% lower. Other big losers would be: Belgium (-23.9%), Ireland (-28.6%), Italy (-27.3%), Portugal (-47.2%) and Spain (-35.5%). So it may be prudent to hold off investing in these countries or any of the broad European exchange-traded funds, such as iShares S&P Europe 350 Index Fund (NYSEARCA:IEV).

Actually, a total collapse of the euro would be a rather extreme event. A more probable event may be 3-4 of the weaker members leaving the EU. The time to buy their stock markets, then, would be after they exit and their currencies are trading substantially below the euro. History shows that such countries experience export booms and vigorous growth over the ensuing years.

Disclosure: Author currently owns the iShares MSCI Germany Index Fund

Source: How To Invest In Europe