The European economy is hardly booming, with the European Central Bank recently halving its growth forecast for 2014. The bank also drastically reduced its outlook for next year, now saying the region’s economy is likely to grow by just 1% rather than the previously forecast 1.6%, and believes the new reduced rate might even be overly optimistic.

With that weak economic backdrop, this wouldn’t seem like an ideal time to start looking at European home improvement retailers. When the US fell into its own recession, shares of Home Depot fell by more than 50% thanks to a plunging real estate market and rising unemployment. The nature of the European crisis is a little different though.

While their woes may have begun because of a contagion effect of our own crisis, at this point the region has largely worked through the housing aspect of the troubles. In fact, rather than focusing on keeping people in their homes, some countries are actually incentivizing sales. In the United Kingdom, for instance, after home prices are once again on the rise after dipping slightly in September and are expect to be up by as much as 7% in some areas of the country.

Earlier this month the British introduced a drastic reform to their Stamp Duty Land Tax system, wiping out a rigid system of pricing bands in favor of a more progressive system which results in those buying lower-priced homes paying significantly less in taxes. The move is expected to create many first-time buyers and a wave of upgraders – people moving up to the next price rung as they buy larger properties – and give the U.K. property market a boost.

That was bound to be encouraging news for executives at Kingfisher (London: KGF, OTC: KGFHY), Europe’s largest home improvement retailer and the third largest globally, trailing America’s Lowe’s Companies (NYSE: LOW) and Home Depot (NYSE: HD). It operates nearly 1,200 stores in 11 European and Asian countries. The company’s profits in the U.K. and Ireland were up 11.1% in the third quarter, even before the recent tax changes were introduced. With a wave of buying in lower-end properties likely imminent thanks to lower taxes, a resilient housing market and generally stronger British economy, the company’s performance in the region is likely to only strengthen from here.

Granted, the picture isn’t quite as rosy in France, the home improvement chain’s other major market. Third quarter earnings there fell by 14% in the quarter due to the generally weak economy and recent legislation there that, among other things, capped rents and slowed investment.

The French government appears to have seen the error of its ways though, announcing in November that the rent caps would only be applied on an experimental basis in some of Paris’s most expensive neighborhoods. It also said that landowners who sold property before the end of next year would get a massive 30% break on capital gains taxes in an effort to spur property development. Most watchers expect those changes to result in marked improvement in the French property market next year.

That makes it likely that Kingfisher will catch a tailwind next year, good news for what is already the region’s strongest DIY chain. The company has focused on selling common products across all of its major chains (B&Q and Screwfix in the U.K., Brico Depot and Castorama in France), and aims for 50% of sales to be its own common brands. As a result, most of the company’s products meet the safety standards of each market it operates in while helping to keep costs in check. As a result, it generally shows better returns on both assets and equity than most of its European peers with solid operating margins.

The company is also extremely attractive on a valuation basis, trading at just 13.8 times trailing earnings. By way of comparison, the company’s own 5-year average PE is 25.4 while the industry as a whole is trading at 22.6 times, a figure largely skewed by its American counterparts.

So while the third quarter was challenging to say the least, with revenue down 3.6% to $4.4 billion and profits down 11.8% to $350.5 million, it should get a boost in the quarters to come thanks to helpful government policies. Granted, this is a higher risk play since it is possible the European economy could continue to worsen, but with shares trading near a 52-week low and yielding nearly 3%, there is substantial upside potential even if the region just holds its own.

Kingfisher is a great European turnaround play up to $14.