Why European stocks will beat the US: Trader

European stocks continued their rally on Friday, spurred by hints from the European Central Bank this week that another round of quantitative easing could be on the way.

And according to one trader, the recent spike is one of many reasons to jump into European equities.

Read MoreECB leaves rates unchanged, all eyes on QE

Andrew Burkly, head of portfolio strategy at Oppenheimer, said European stocks have more growth potential than domestic markets. GDP growth in Europe is still sluggish, Burkly said, and likely to pick up with further stimulus.

"They're just earlier in the recovery in the profit cycle, so relative to the U.S. there's a lot more catch-up," Burkly said Thursday on CNBC's "Trading Nation."

Corporate profits are still well below their peaks, he added, and the weakening euro will help drive further growth. The euro dropped more than 2 percent against the dollar this week as European stocks rose.

But given the fall in the euro, Burkly recommended buying an ETF such as the WisdomTree Europe Hedged Equity Fund (HEDJ), which protects against currency risk.

Read MoreLook out below: Draghi pushes euro to precipice

HEDJ has risen more than 9 percent year to date. Meanwhile, the unhedged iShares MSCI Europe ETF (IEUR) has risen 2 percent this year.

"We'd probably look to hedge that exposure a little bit, if the euro were to weaken a little bit further," Burkly said.

European Central Bank President Mario Draghi.
Ralph Orlowski | Reuters
European Central Bank President Mario Draghi.

However, Larry McDonald of Societe Generale warned that buying European equities now could be getting into what is already a crowded trade.

"Between now and next June, 93 percent [of analysts] are telling us that the ECB will do more QE," McDonald said. "You have to ask yourself, 'How much is priced in here and how much meat is left on the bone in this trade?'"

The ECB left interest rates unchanged on Thursday, and ECB President Mario Draghi said the central bank will consider further stimulus if deemed necessary.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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