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Power Play: Pick China over Europe

A Chinese worker at a steel mill in Hefei, China.
AFP | Getty Images
A Chinese worker at a steel mill in Hefei, China.

With the Fed expected to raise interest rates this year, many investors are putting money in European stocks. There's the assumption that valuation is now better in Europe after the European Central Bank announced its bond-buying program.

But Mike Holland, chairman of Holland & Company, tells CNBC's "Power Lunch" on Tuesday the dollar's strength has taken away a good part of the gains in Europe. Holland believes a better play is investing in China since currency conversion doesn't hurt you as much with the yuan pegged to the U.S. dollar.

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"China is out of favor, like to go where people aren't," Holland said. He also points to the Chinese government's massive investment in the country as a reason to invest there.

Holland says you can invest in China through exchange-traded funds, index funds or through managers on the ground there with solid track records.

The Stoxx is up 17 percent year-to-date, while the Shanghai Composite is up 14 percent. Both closed higher on Tuesday.