(FORTUNE Magazine) – This could be the best time to buy into Germany Inc. The stock euphoria sparked by the breaching of the Berlin Wall is long gone. The true costs of reunification and the Iraqi invasion of Kuwait have sent the German bourse -- Frankfurt, Berlin, and six other stock exchanges -- tumbling to its lowest level in more than a year. At today's share price levels, argues David Roche, Morgan Stanley's chief European strategist, ''Germany is one of the most attractive markets in the world.'' There are some wrinkles to assessing a German company's performance. High corporate tax rates encourage businesses to bury their profits, which they often do by reinvesting them in the company. As a result, price/earnings ratios massively understate a company's earnings power. Instead, analysts prefer to look at the ratio of stock price to cash flow, which shows a company's ability to finance expansion. American investors are best served by buying foreign companies' ADRs, or American Depositary Receipts. These trade in the U.S. like shares. Companies that can rebuild East Germany's tattered infrastructure look particularly good (see table for a sampling). Mannesmann, for example, makes heavy machinery and builds plants. Says John Van de Graaff, senior research analyst at New York City's ABD Securities, which is 75% owned by Dresdner Bank: ''By 1993, Mannesmann should begin several years of nearly 20% annual profit increases.'' Mannesmann also leads a consortium that hopes to install cellular telephone systems throughout Germany. The consortium's potential, says Van de Graaff, could increase the value of Mannesmann's shares by up to 60% in the next year. Siemens, a manufacturer of electrical equipment, appears on many buy recommendations, largely because of East Germany's acute need for electric power. Bayer, commonly associated with aspirin, is actually a huge multinational chemical company engaged in genetically engineered agrochemicals and plastics production. Despite excellent management, Bayer's stock has been hit hard. Says John Legat, portfolio manager of G.T. Global Europe Growth Fund: ''Bayer is trading at ludicrously low levels.'' East Germans want wheels. Waiting lists of up to 15 years are a thing of the recent past, and Volkswagen has added a shift CKto meet demand. Even so, only half as many East Germans own a car as West Germans. Other foreign automakers, including GM, have a German presence. But Volkswagen beat them across the border and is already manufacturing engines in the East. The recent share price of Volkswagen ADRs: $52. Says Ken Oberman, manager of Oppenheimer Global Fund: ''At a price/cash flow multiple of 1.6, VW is incredibly cheap.'' No roll of German powerhouses would be complete without Deutsche Bank, which, with its diversified investments in German companies, is something of a proxy for the market as a whole. Holdings include over 100 branches of the former East German state bank, Deutsche Kreditbank. Unused to market interest rates, East Germans are hurrying to open accounts, CKand the branches are already profitable. Juliet Cohn, Kleinwort Benson's fund manager for Continental Europe, also expects Deutsche Bank's 1989 acquisition of Britain's Morgan Grenfell investment bank to enrich the parent's bottom line. She anticipates a 15% earnings growth for 1990.

CHART: NOT AVAILABLE CREDIT: SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL CAPTION: THE GERMAN STOCK EXCHANGE GERMANY BECKONS Its stock market is lower than it was even before the Berlin Wall fell a year ago, and shares are selling at bargain prices. Because of the German tax system, investors look at the share price to cash flow ratio rather than price/earnings for a better gauge of financial strength.

CHART: NOT AVAILABLE % CREDIT: SOURCE: ABD SECURITIES CORP./DRESDNER BANK CAPTION: GERMANY BECKONS Its stock market is lower than it was even before the Berlin Wall fell a year ago, and shares are selling at bargain prices. Because of the German tax system, investors look at the share price to cash flow ratio rather than price/earnings for a better gauge of financial strength.