The euro zone financial crisis hasn’t dominated the headlines the way it did even six months ago, but many high-quality European companies are still struggling to get the respect they deserve from investors.

If you live on the US East Coast, you’ve probably never heard of Belgium-based Delhaize Group (NYSE: DEG), although you’ve likely shopped in at least one of its stores.

Better known here in the US as Food Lion, Bottom Dollar Food, Harvey’s or Bloom, the company operates a global chain of about 3,500 supermarkets and convenience stores spanning the US, Belgium, Luxembourg, Greece, Serbia, Bosnia and Herzegovina, Romania, Bulgaria, Albania and Indonesia.

Home to about 1,500 of the chain’s locations, the US accounts for about 60 percent of Delhaize’s annual revenue.

Intense competition with retailers such as Wal-Mart (NYSE: WMT) and growing food inflation have squeezed Delhaize’s margins and pressured its sales growth, dampening the market’s enthusiasm for its shares. But the company has been investing heavily in updating the look of its stores. The company also has implemented price breaks and greater product assortment. While pressuring margins today, these improvements will drive traffic growth in the quarters to come.

With that program of investment already well underway, Delhaize Group has seen strengthening financial results in North America.

Emerging market sales are also growing strongly, up 30 percent last year after the acquisition of the Serbian Maxi stores. Over the past decade, Delhaize has increased its emerging market footprint from fewer than 150 stores in 2002 to nearly 1,100 today.

While weak economic conditions in the emerging countries of southern and eastern Europe will likely remain a challenge for some time to come, the company’s financial strength has allowed it to withstand the weakness and actually grow its market share to better than 20 percent in most countries in the region. When the economies there inevitably improve, the company’s stores will be well placed to benefit from gains.

Financially, Delhaize Group is extremely well positioned, with a debt-to-equity ratio of just 0.6 and long-term debt-to-capital ratio of less than 40 percent. That’s less than its major US competitors such as Kroger’s (NYSE: KR) and Safeway (NYSE: SWY) and also results in much better free cash flows.

Those cash flows support a much larger dividend yield than its peers (currently 2.8 percent) and actually allow for high potential payout growth than most of its peers.

Another big plus for the company is that most of its competitors are being forced to adopt pricing strategies it already has in place, such as eliminating double- and even triple-coupon promotions and opting for a lower base price strategy, reducing the need for discounting. Kroger is in the process of rolling out its new lower price strategy across its stores and, when that is completed, Delhaize’s stores will be in a much better competitive position.

Delhaize also has the potential to reduce its capital spending on opening additional stores by transitioning to more of a franchise driven model. While about a quarter of its Belgian locations are currently owned by franchisees, the company hasn’t expanded that model to other geographies. The company hasn’t said that it is interested in pursuing additional franchises, but it would allow for much more rapid growth at a lower cost while bring more local knowledge into its operations.

The company’s profits will remain under pressure throughout this year, but continued economic improvement across the globe will likely drive upside surprises in earnings. Additionally, its high forecast free cash flow of about USD650 million for this year will allow for further debt reduction and potential dividend increases, as its spending falls and results even out.

Although European companies still face undeniable challenges in the near term, there’s significant upside for those like Delhaize Group which have managed their businesses well throughout the recession.

Buy Delhaize Group up to 71.