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 (PG) 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 (PEP) 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 (STZ). 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

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 Grom.

"The point of differentiation is they’re driving category growth and gaining market share," Grom told Yahoo Finance.

P&G reported organic sales growth of 7% for its latest quarter, with gains coming from all 10 of its product categories.

Its CEO Jon Moeller called the results "strong" in an interview with Yahoo Finance, adding the performance put the company on "a solid path" to deliver towards the higher end of its fiscal year guidance.

Johnson & Johnson

The increasing popularity of weight loss drugs is not only changing consumer eating habits but demand for weight-loss surgeries as well. That’s having an impact on medical device makers like Johnson & Johnson (JNJ).

The newly restructured company called out slowing sales in its medtech division in the third quarter, due in part to reduced demand for weight-loss procedures.

"We’re seeing some impact in our bariatric business in the short term as some patients are reconsidering surgery, expecting to get treatment," J&J CEO Joaquin Duato told analysts on the company’s earnings call.

But that headwind is expected to be short-lived, and according to one strategist, the risk is already priced into the stock.

"It’s a small impact for them, … and it’s already factored in," RBC analyst Shagun Singh Chadha told Yahoo Finance. "Johnson & Johnson is a quality company and set up well in the interest rate environment heading into 2024."

J&J shares have declined 13% year to date.

The Hershey Company

Hershey (HSY) has been among the worst performers in the Consumer Staples sector over the last six months, with shares down by more than a quarter. Since hitting a 52-week high on May 1, the stock has declined roughly 30%.

But despite its recent underperformance, Portfolio Wealth Advisors president Lee Munson told Yahoo Finance there’s still a lot to like about the iconic American company — specifically, its reliable dividend.

"There used to be a time when a stock had a 2.5% dividend that was actually higher than a 10-year Treasury, and people loved it," Munson told Yahoo Finance. "I think over the next year or two, that's going to come back en vogue. Take advantage of the staples people still want to buy."

Hershey raised its dividend by 15% to $1.19 a share in July, marking the 13th year in a row of dividend increases.

Hershey is scheduled to report third quarter results on Thursday, October 26.

Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email [email protected].

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