It’s summertime but the living isn’t easy, at least for some tourism-dependent European countries. That’s why the European Union just unveiled a $2 trillion stimulus proposal that combines over $800 billion in recovery funds with a $1.2 trillion budget for the next seven years. With that in mind, it’s time for investors to seriously consider European stocks.

In many ways, the investing thesis here is similar to that after legislators passed the CARES Act in the U.S. Some of the hardest-hit businesses will now get the cash they desperately need. As more investors believe in a company’s ability to weather the novel coronavirus storm — especially as reopening progresses — shares prices will rally sharply creating nice profits.

Don’t believe me? Several struggling European stocks clocked in thrilling rallies just last week on the initial news.

Granted, as with any big-ticket bill, the proposed stimulus is controversial. Some countries that are less reliant on tourism are uncomfortable with the bill’s issuance of common eurozone debt. Repayments would begin in 2028, and according to The Wall Street Journal, would be funded through bloc-wide taxes and EU member contributions. As I wrote in InvestorPlace’s live blog:

“The potential ‘bad guys’ in this news have been dubbed the Frugal Four — Sweden, the Netherlands, Denmark and Austria. According to the team at Morning Brew, these northern states are ‘spooked’ at the thought of taking on so much debt on behalf of struggling economies. Investors should prepare for weeks of debate and changes to the proposal, as all 27 nations must agree.”

But that debate doesn’t negate the potential in European stocks. Here are four names to consider now:

• Renault (OTCMKTS:RNLSY)
• Ryanair (OTCMKTS:RYAAY)
• Lufthansa (OTCMKTS:DLAKY)
• Banco Santander (NYSE:SAN)

 

European Stocks: Renault (RNLSY)

There’s more than one reason for investors to be bullish about Renault stock here. Like its American peers, the French automaker was hit hard by the pandemic. As the virus started spreading around the world, shares plunged. But now RNLSY stock is on the upswing.

In just the last month, shares are up 26% — and they have plenty more room to run before they hit pre-pandemic levels.

According to MarketWatch’s Barbara Kollmeyer, Renault will benefit from country-level funds as well as the potential EU bailout. The French government has already promised to spend “billions” to help the auto industry and as an industry giant, the company should rake in much of the cash.

Think about it. Car companies like Ford (NYSE:F) and General Motors (NYSE:GM) were among some of the biggest market victims in the U.S. No one was driving, and consumer spending dropped at a record pace. But when plants began to reopen and consumers began opting for cars over public transit, we saw those same U.S. names launch an impressive rally.

Europe is already considering a surge in driving. One report suggests that some European companies are specifically asking employees not to use public transit as a means to mitigate infection levels. Public transit certainly has loyal followers, but fear is a powerful motivator.

There’s one more big reason to embrace RNLSY stock here. It just announced a new cost-cutting alliance strategy with Nissan (OTCMKTS:NSANY)and Mitsubishi (OTCMKTS:MSBHY). Each of the three businesses will handle a specific area of innovation. Renault’s focus is connected-car technologies and key markets like Europe, South America and North Africa.

Ryanair (RYAAY)

We would be remiss to discuss European stocks without taking a close look at the airlines. Same as U.S. passenger carriers American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL), European airlines have struggled lately due to the pandemic.

That makes perfect sense, given that all+ sorts of lockdowns and fears of flying seriously depressed the number of people boarding for takeoff. Rumors have it that Sir Richard Branson’s Virgin Atlantic (NYSE:SPCE)is at risk of filing for bankruptcy. But Ireland-based Ryanair is ready for a big rebound.

According to Irish Examiner’s Geoff Percival, Ryanair is one of many travel-oriented companies benefiting right now. Shares rallied on news of the proposed bailout, but there’s more to the story. Countries including Spain, Italy, Portugal, Greece and Cyprus are beginning to remove visitor restrictions. Percival wrote last week that beaches could even be open as early as July for sun-hungry tourists.

So now Ryanair is right back in the race with its peers to attract passengers at competitive fares. Ryanair CEO Michael O’Leary has been critical of Virgin Atlantic and other European airlines, positioning himself — and his company — in opposition to those clamoring for aid. It’s clear the chief executive is confident in his business— and that goes a long way.

Shares are up 30% over the last month, and the climb higher isn’t stopping here.

Lufthansa (DLAKY)

Like French competitor Ryanair, German airline Lufthansa is also set to receive bailout funds from its home country. On Tuesday, DLAKY stock climbed 8% higher on news anticipating $10 billion in relief money.

Of course, that’s all relative. Lufthansa is an airline, after all, and certainly hasn’t been immune to the effects of the novel coronavirus pandemic.

In January, over-the-counter shares of the premiere airline were trading for almost $20. Now, even after climbing 20% in the last month, they’re just over $10. But given the intensity of the March selloff and the quicker-than-expected market recovery, that looks like a lot of upside potential.

Granted, like with most bailout funds, there are strings attached here. According to Bloomberg’s Christopher Jasper and William Wilkes, Lufthansa has agreed to slightly reduce its presence at airports in Frankfurt and Munich. This move will allow smaller competitors more of a fair chance, and earned it some government favor. Plus, if the funding comes through, the German government will become Lufthansa’s largest shareholder.

That’s not necessarily pretty, but it proves Lufthansa will survive the crisis. Germany is in a strong position relative to many of its EU peers, and it’s one of the countries leading the charge for the bailout plan.

Also like Ryanair, Lufthansa is set to benefit from resurgent travel demand. If consumer behavior in the U.S. is analogous, pent-up demand will make the beaches a hot destination this summer. Just look at all the pictures from Memorial Day weekend for proof.

With all this mind, investors should expect the rally in DLAKY stock to continue.

Banco Santander (SAN)

Boy, this list of European stocks is giving me some déjà vu. Just like U.S. banks, banks in Europe — both inside and outside of the eurozone — tumbled as the pandemic began to wreak havoc. And just like we saw with Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM), much of that tumble was unwarranted.

So it makes sense bank stocks are some of the European names most likely to rally higher on an EU bailout. Spain’s Banco Santander is a particularly strong contender for a rebound play here.

Remember how many U.S. experts urged investors to recognize that the pandemic was different than the Great Recession? Well, that same narrative is playing out in Europe. Bank stocks fell across the board and Barron’s Pierre Briançon says fears of the financial crisis were definitely at work.

Although several bank stocks are leading European indices higher, pick up Banco Santander shares first. It’s often considered one of the eurozone’s top lenders, which means it has a great reputation. A bank’s ability to maintain consumer trust is key factor in their recovery.

Reuters’ Sruthi Shankar detailed last week how Banco Santander has been on a winning streak, and the rally isn’t ending there. Shares are up 12% in the last month with more upside to come.

Sarah Smith is a Web Editor for InvestorPlace.com. As of this writing, she did not hold any of the aforementioned securities.