Another year, another overreaction.

Stocks plunged in China on Monday after December’s industrial manufacturing number came in lower than expected. After dropping 7%, trading was halted prematurely for the first time ever. U.S. stocks sold off sharply on the open, though they calmed after that and rallied at day’s end. When it was over, the S&P 500 dropped about 1.5%. Not a great start to the year!

#-ad_banner-#While it’s scary to experience a sharp downward trend after the holiday lull, calmer heads seemed to prevail — at least in U.S. markets — and that makes sense. China’s economic slowdown has been common knowledge for several quarters, and the December numbers were far from catastrophic. And China’s economy is far less dependent on manufacturing than it was a decade ago. The country’s burgeoning middle class has created a fast-growing consumer sector that is relatively healthy.

Even if China’s economic growth is lower than expected in 2016, it’s still expected to continue to grow faster than ours, and the U.S. economy is chugging along fairly well and should remain in an expansion mode. U.S. companies and consumers have spent the past several years getting their balance sheets in order and accumulating cash. We are less dependent on China than many folks believe.

When you see Chinese stocks falling, keep in mind that the Shanghai Composite rose nearly 150% between the start of 2014 and June 2015 — a bubble that resulted in a sharp correction that may well continue as China’s economy struggles to meet expectations. Our stock market has not experienced a bubble in recent years; valuations certainly are inflated for some stocks, but not for the market as a whole or for many of its largest members.

That said, it makes sense for investors to pay attention to global trends, in China and elsewhere, and position their portfolios accordingly. As I wrote here, Goldman Sachs recently found that companies in these sectors tend to have greater China exposure: information technology, materials, industrials and consumer discretionary. And individual large-cap stocks with substantial dependence on revenue from China include Wynn Resorts, Qualcomm, Broadcom and Texas Instruments.

By contrast, here are two stocks that (1) have attractive fundamentals, (2) have little direct exposure to China and (3) are well-positioned to thrive in 2016 and beyond.

McKesson (NYSE: MCK) is the largest pharmaceutical distribution company in the United States, delivering about a third of all prescription medicine in North America. As such, it is largely insulated from economic weakness in China (or at home) while benefiting from the graying of America and the increasing trend toward using ethical drugs to treat chronic illness. McKesson has strong relationships with pharmacies across North America, particularly Walgreens (Nasdaq: WBA) and Rite Aid (NYSE: RAD), which are attempting to merge.

In addition to its drug distribution business, McKesson owns Health Mart, a chain of more than 4,200 pharmacies, and provides information technology services to pharmaceutical and healthcare companies. It also distributes medical-surgical devices and has overseas operations in Latin America, Australia and elsewhere.

Despite being one of the largest companies in the country — with an estimated $180 billion in 2015 sales — McKesson remains in strong-growth mode, with revenues increasing at a high single-digit rate and earnings per share expected to grow 14% annually over the next couple of years. Its size gives McKesson a competitive advantage thanks to economies of scale, relationships, and one-stop shopping opportunities. The company, which has been in the medicine distribution business since the 1830s, is also an innovator and partner with research institutions and government agencies, which increases its political clout and competitive strength.

McKesson is extremely strong financially, with low debt and more than $3 billion a year in operating cash flow. The stock trades at a reasonable valuation given its financial strength and growth prospects.

Xcel Energy (NYSE: XEL), which I pegged as a defense against Chinese economic problems here, remains one of the best bets among utility stocks for 2016.

A well-diversified and electric and natural gas utility, Xcel serves 3.5 million electricity customers and 2 million natural gas customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. About 80% of its revenue comes from electricity, with most of the rest from natural gas utilities.

Xcel is the #1 wind-power generator in the United States, deriving 15% of its power from wind alone; the company aims to generate more than 30% of its power from renewables in Colorado and Minnesota by 2020. That’s a plus, as public policy increasingly will favor power sources that help reduce greenhouse gases. Xcel’s push toward renewables will help the company reduce its current reliance on coal, which accounts for 46% of its electricity production now. Xcel gets a third of its power from natural gas and nuclear, which are not only relatively clean compared with coal, but low-cost sources.

Xcel looks poised to enjoy rising cash flows from its regulated operations for years to come. Its balance sheet is exceptionally strong, with debt only about half of its total capitalization. Xcel has increased its dividend steadily since 2004 and is due for another increase in the spring. The stock currently yields 3.6%.

Risks To Consider: Xcel is a relatively low-risk utility stock that should benefit from its leadership in the fast-growing renewable energy space, but rising interest rates could hurt utility stocks. McKesson is vulnerable to regulatory risks related to federal government reimbursement policies, as well as potential upheavals caused by consolidation in the pharmaceutical, distribution or pharmacy sectors.
    
Action To Take: Xcel remains a buy under $37.50. McKesson is a buy under $200. 

Editor’s Note: StreetAuthority’s Nathan Slaughter has found two companies that are having record years thanks to falling gas prices. Both already sport massive yields — and he fully expects them to grow even larger thanks to an explosion of new customers. Check out the explosive profit secret — including how you can cash in — here.