Although Continental Europe faces significant challenges, its economy appears to be picking up, welcome news after a prolonged period of contraction, suggests global specialist Yiannis Mostrous in Capitalist Times.

The region's economy should also benefit from various member states easing their austerity programs. France and Spain, for example, have pushed back the target date for achieving their fiscal goals by two years.

With the euro hovering around US$1.33 and likely to head lower into 2014, rising exports could provide a meaningful boost to the Continent's economy, which generates about 43% of its sales outside of Europe.

Meanwhile, domestic demand in the eurozone appears to be stabilizing and could begin to recover in 2014.

France has introduced a number of important changes to stimulate the domestic economy, including pension reform, corporate tax credits, and lower social security payments.

Nevertheless, the country's elevated labor costs, relative to other European economies, remains a headwind. The country has also lost some of its share of the export market, and its current-account deficit has been stuck at 2% of GDP.

At the same time, France's economy depends heavily on domestic demand, reducing its exposure to the global economy. With the French government holding the key to the country's recovery, expect the nation to get its house in order.

Investors seeking exposure to France's economic turnaround should buy iShares MSCI France (EWQ) up to $30.00 per share.

Meanwhile, Italy boasts one of the cheapest equity markets in Europe, based on a number of valuation metrics—a reflection of the country's fiscal problems and a decade of subpar economic growth.

That being said, leverage in Italy's private sector accounts for only 126% of GDP (fourth lowest in the eurozone) and net foreign liabilities represent 25% of the total economy.

Austerity measures have Italy's current-account to a surplus, while the government's budget deficit should shrink to less than 3% this year.

Although Italy has made a lot of progress healing its economy and improving its fiscal health, additional reforms will be necessary. Investors looking to come along for the ride should buy iShares MSCI Italy (EWI) up to $15.00 per share.

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