Consumer staples, a group of dividend-paying stocks long-viewed as bond proxies, has been among the worst performing sectors this year.
A historic surge in treasury yields, the growing popularity of weight-loss drugs like Wegovy, and concerns over elevated valuations have created a “perfect storm of events,” UBS analyst Pete Grom told Yahoo Finance Live.
Those headwinds have fueled a selling frenzy as investors look to reduce their exposure to the former Steady Eddies. The consumer staples sector (XLP) has declined more than 9% year-to-date compared to the S&P 500’s (^GSPC) 12% climb.
But is a sentiment shift on the horizon?
It’s still early in the earnings season, but commentary from C-suite executives has been encouraging — specifically around commodity prices and weight-loss drugs.
Procter & Gamble CEO Jon Moeller told Yahoo Finance Live he sees lower commodity costs “helping” results, and expects tailwinds of approximately $800 million due to favorable commodity pricing for the remainder of the fiscal year.
Earlier this month, Pepsico CFO Hugh Johnston told Yahoo Finance that he doesn’t see “any impact” from weight-loss drugs, after the company reported better-than-expected third-quarter results.
The same is true for beverage giant Constellation Brands. Its CEO Bill Newlands told Yahoo Finance he doesn’t see any signs that weight-loss drugs are reducing demand for beer, calling the fear “overblown.”
So what are the best ways to play this downtrodden sector? Yahoo Finance Live put those questions to strategists and top analysts. It turns out they see some buying opportunities for investors looking for a bargain in a volatile market.
Procter & Gamble (PG)
Procter & Gamble beat third-quarter earnings estimates and reiterated its full-year guidance, sending shares into positive territory following the results. The better-than-expected numbers, along with easing commodity costs, positions Procter & Gamble “well among its peers” with room to “move higher”, according to UBS analyst Pete Grom.
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