Sarah Ketterer (Trades, Portfolio), founder of Causeway Capital Management, joined CNBC Tuesday to discuss why she believes European value stocks offer strong potential.
Ketterer highlighted that the value index trades at only 12 times next year's earnings, while the growth index trades at a "whopping" 20 times. At the same time, volatility has declined and returns have increased, which she called "not a sustainable situation."
"So we tell our clients, make sure you have value, make sure you have that diversification," she said. "Don't put all your eggs in one growth market."
Banks, industrials and defensive areas, in addition to European stocks, appear attractive, Ketterer said. One of her picks is Volkswagen AG (XTER:VOW, Financial).
