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Portfolio manager makes contrarian call on a market laggard

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Debating one of this year's worst-performing sectors

Betting on so-called safety stocks has been anything but a safe bet this year.

The consumer staples sector, often referred to as "soup and cereal stocks," is the third-worst group this year, but some see upside ahead for the beaten-down group.

"Some of the sector's names are a good value at these depressed levels," said Chad Morganlander, portfolio manager at Washington Crossing Advisors. "You have companies that are consistently growing, consistently profitable with very little debt — many of them rising dividend companies. I think it's time to pick up some of the rubble," Morganlander said on CNBC's "Trading Nation."

Specifically, he recommends beverage names such as Dr. Pepper, Budweiser parent company Anheuser-Busch InBev and Pepsi. He also recommended Hormel and Church & Dwight.

"These are all quality companies that we believe the revenue is going to be substantially higher [for], as well as profitability will be higher, regardless of the economic situation," he added.

Some aren't as optimistic on the space.

Consumer staples stocks have performed so poorly as investors have been "very much intrigued by the opportunities in the financials, as well as tech stocks," said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.

According to Lien, while staples are heavily dependent on consumer spending, the group may not benefit from improving economic conditions (such as wage growth) as investors will likely position themselves away from safety stocks in an improving economy.

"If you believe that President Trump's tax reform is going to make a meaningful impact on the economy and take stocks to even higher levels, then this risk appetite is going to continue and money will continue to move out of the safety stocks into these higher, greater opportunity stocks, especially as interest rates are expected to rise further," Lien said Friday on "Trading Nation."

The consumer staples sector was down modestly in Monday trading, affected by downside seen in names such as Hormel and Procter & Gamble.

Disclosure: Chad Morganlander's firm owns shares of Dr. Pepper, Anheuser-Busch InBev, Pepsi, Church & Dwight and Hormel. He does not personally own these stocks.