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Having China Exposure Is Not a Reason to Dump a Stock

The turbulent performance of market indices worldwide brought about by the ongoing trade war has been observable on a daily basis. Tariffs being put on imported goods from either the U.S. or China causes some investors to panic-sell instead of endure the situation until both countries find a deal. Those who have remained invested and think that their companies will carry on have reaped some benefits.

The first example, Costco (NASDAQ:COST), gained a healthy 5% yesterday, bringing its stock price to an all-time high. This happened after it successfully opened its store nowhere else but in China. The Costco store opening was met by a deluge of people, three-hour-long parking wait, and an early close on its opening day due to the welcome reception by its new-found customers. Should the store opening have been a flop brought about by anti-American product sentiment, just like in Apple's case, investors may have seen a totally different stock performance. Costco has performed well this year, delivering total investor return of 44%.

The tech giant Broadcom (NASDAQ:AVGO), meanwhile, has provided a strong 32% to its investors within the past year despite its heavy exposure to China. Despite Broadcom's announcement of a $2 billion hit after a Huawei ban in May, the company continued its acquisitive nature with its mid-summer $10 billion deal with Symantec (NASDAQ:SYMC). Broadcom generated 49% of its total sales from China alone in its previous fiscal year.

Yum China (NYSE:YUMC) has not failed its investors either so far this year after having generated a 29% return. Despite missing revenue expectations in its recent quarter, the China fast-food operator beat earnings expectations as it delivered a much stronger 4% company-metric same-store sales increase in its recent quarter compared to a 1% decline in the same period last year. The performance indicates that the company has reliable fast-food operations and that Chinese consumers will not pass on a good KFC original chicken bucket meal due to skirmishes transmitted via business wires.

Disclosure: Long Costco.

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This article first appeared on GuruFocus.