Peripheral European stocks, in particular Greece, are going to be the source of real value for investors, according to one analyst.
Despite the country spending much of 2012 under the threat of expulsion from the euro zone and needing bailout cash from international creditors to pay its bills, Greek stocks have managed to perform surprisingly well, Patrick Legland, Global Head of Research at Societe Generale, told CNBC.
German stocks were considered to be the obvious star performer within the embattled euro zone last year.
"Within all asset classes worldwide the top performer in the last six months is Greece – Greek equities are up 30 percent," Legland told CNBC Thursday. Germany's DAX in the same period was up 17 percent.
In 2012 the ASE, Athens' benchmark index, was up 33 percent,ahead of Germany's DAX which gained 28 percent over the year.
"We know the difficulties but it trades at 20 percent of book value. We have the same situation for telecoms companies but also other peripheral assets where we see very good value, in Spain, Greece and Portugal.There are risks but they are fully discounted valuations," Legland added.
Legland echoed some of the views of colleague and notoriously bearish chief global strategist at SocGen, Albert Edwards, who this week sparked speculation that he was watering down his pessimism after saying that there could be a "once in a lifetime opportunity" to buy European stocks.
"In the last few years he [Edwards] has been absolutely right. His view is shifting and he's changing his mind, [now] far more positive on equities. The best way to protect against inflation risk is equities," Legland said.
Chris Tinker, founder of Libra Investment Services, added that the risk factor for equities across the board had diminished significantly in the last six months, which should buoy markets further saying the "downside of equities [was] now removed."
"We had a risk of things going bust and currency collapse but we're now seeing the market willing to take on risk. We're now looking for the growth dynamic and for what will give us capital returns. It's very important that [investors] recognize that there is a difference between short term and long term investing," Tinker said.
"If you combine the cheapness of equities, all the liquidity and the risk of inflation – you have one of the best asset classes for the next 5 to 10 years," Legland said.
By CNBC's Shai Ahmed; Follow her on Twitter @shaicnbc