Based on forward p/e and cash flow multiples, European shares are trading at very attractive price levels versus U.S. equities, according to Dr. Carla Pasternak, editor for Dow Theory Letters' The Income Investor.

Despite concerns about Brexit and France's anti-EU presidential candidate Marine Le Pen, investors are driving up European stocks.

Robust fundamentals out of Europe are supporting higher share prices. The region's fourth-quarter profit growth was the strongest in two years, outpacing U.S. growth.

STOXX Europe 600 ratcheted up 11% earnings year-over-year growth compared to just 5% for S&P 500 companies, according to JPMorgan Chase data. After five years of sluggish growth in corporate profits, this turnaround is expected to continue.

Small cap stocks are leading the charge in the resurgence of European equities. Compared to export-oriented conglomerates, small-cap companies are closely tied to Europe's domestic economy and are expected to benefit from the healthy outlook at home.

Small caps are also seen as more insulated than their large cap brethren from rising economic protectionism in the U.S. and Europe.

WisdomTree Europe SmallCap Dividend ETF (DFE) provides easy access to a diversified group of high-yield European equities that don't trade on a major U.S. exchange.

This $800 million fund holds a portfolio of over 350 different dividend-paying small-cap companies in 15 developed European markets. Over half of the portfolio companies are based in the U.K., Sweden, and Italy.

Dividends are paid three times a year in U.S. dollars and vary depending on distributions from the underlying portfolio holdings. Annual dividends per share of $2.21 last year were up from the previous year's $1.56 and give the fund a generous trailing yield of 3.7%.

With five-year annual average returns of 14%, DFE ranks in the top 1 percentile of Morningstar's Europe Stock category. Year-to-date returns of nearly 9% are trouncing the Russell 2000 Small Cap Index's meager 0.6% returns so far this year.

Even more impressive, DFE has achieved these returns with a lower volatility of just 9% compared to 14% for U.S. small caps in the benchmark index.

The shares bullishly broke out of an ascending triangle last month, completing a long-term base. This base formed over the past two years, with resistance just below $58 and a double bottom just under $47. Old resistance of the base near $58 now forms new support.

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Since hitting a high of $59.75, the shares have remained above the rising 10- and 40-week moving averages. The measuring principle, which is calculated by adding the height of the base ($58-$47=$11) to new support, projects a price target of around $69 ($58+$11=$69). 

RSI is on an uptrend but not yet overbought. MACD is still giving a shallow buy signal. We caution that the largest country weighting, over 25% of the shares, is in the U.K. which could be vulnerable to Brexit.

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