“We see a relatively higher share (9%) of 5-star stocks in the drug manufacturing industry. While concern over drug pricing pressures has abated to some extent, we believe the market has still placed too much pressure on potential drug pricing concerns, opening up a couple of significantly undervalued stocks,” according to Morningstar.

There will also be some attention paid to the Affordable Care Act, also known as Obamacare, following a Texas judge ruling the law unconstitutional in December. However, it is unlikely the issue will be disruptive enough to plague healthcare stocks and ETFs this year.

“Another development that could weigh on healthcare stocks is the potential repeal of the Affordable Care Act in the U.S., a concern that resurfaced after a Texas judge ruled it unconstitutional in December,” said Morninngstar. “We expect appeals to delay any impact, but revoking the ACA would likely create the most pressure for the healthcare services companies.”

For more information on the market sectors, visit our sector ETFs category.

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