Apple Inc. (AAPL), The Procter & Gamble Company (PG) & The Kroger Co. (KR): Here Is How You Deal With the China Sell-Off

Procter & Gamble your best gamble

The company believes that the global economy presents phenomenal opportunities going forward. The company projects that between 2010 and 2020 the middle class will grow by 1.4 billion and 98% of that will come from the emerging markets. The Procter & Gamble Company (NYSE:PG) sells non-cyclical products (things that are always in demand) like tooth paste, and toilet paper. The company will grow earnings based on the economic outlook.

The company believes that it can cut back costs by $10 billion by 2016, and with the company currently earnings $10.7 billion, it means that there is the potential of earnings doubling over the course of three years. Assuming a double in earnings and the company’s 19.4 earnings multiple is actually reasonable. The company also compensates its investors with a 3.11% dividend yield.

Never forget the value of produce

The Kroger Co. (NYSE:KR) operates a diversified portfolio of grocery chains. You might know some of them, and some of them will be completely unfamiliar to you. The company has 3,600 super markets across the United States. The company’s management team blew out earnings in its most recent quarterly earnings announcement. The company grew its earnings per share by 18% year-over-year. The growth in earnings was driven by a slight improvement in its operating profit margin.

The management team projects that it can grow earnings by 8 to 11% over the long-term. The growth is paired with a 1.82% dividend yield. The company trades at 12.2 earnings multiple. The company’s valuation is reasonable when considering the long-term growth potential along with the margin of safety from selling food. The grocery industry is heavily subsidized through food stamps within the United States making it a non-cyclical.

Conclusion

Apple Inc. (NASDAQ:AAPL) will continue to grow earnings regardless of what goes on in China. Apple has a near non-existent presence in China, so if anything, China will only add to Apple Inc. (NASDAQ:AAPL)’s growth. The Procter & Gamble Company (NYSE:PG)will cut costs, which will contribute significantly to the company’s earnings, so I doubt volatility in China could hamper the company’s growth. Finally, The Kroger Co. (NYSE:KR) doesn’t have a single grocery store in China. China isn’t going to hurt these three companies.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple and The Procter & Gamble Company (NYSE:PG). The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL).

The article Here Is How You Deal With the China Sell-Off originally appeared on Fool.com.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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