Stock markets have had a good year so far, with the benchmark S&P 500 climbing above 5,000 this month. However, ongoing political tensions and uncertainty over when the Federal Reserve will cut interest rates have raised questions about which sectors will perform strongly, leading several market participants to say 2024 is the year of stock picking. Morningstar chief markets strategist David Sekera agrees. He said it’s “always a stock-picking market” but that this year it’s even more relevant. “We can look at individual stocks across different themes over the last couple of years to see which stocks were really the ones that outperformed the broader market,” he told CNBC Pro on Feb. 2. “In my opinion, it always comes down to the selection of individual titles.” Sekera is bearish on the defensive consumer sector as he is “probably fully valued” at the moment. However, one name seems like a good play for him: the US food company Kraft Heinz. Morningstar gives the company a five-star rating, and according to Sekera, it has a good dividend yield and trades at a 34% discount to Morningstar’s fair value. The financial services firm gives the stock a rating of between one and five stars, with a five-star rating indicating the stock is undervalued. “The company’s individual costs have increased over the last couple of years as inflation was very high in the U.S. And, to some extent, it has lagged behind price increases,” Sekera said. “As inflation is now moderating, we believe their price increases can recover costs and return to more normalized margins than historical ones.” Kraft Heinz shares fell last week after reporting fourth-quarter revenue of $6.86 billion, below LSEG consensus estimates. However, its adjusted earnings per share of 78 cents were better than forecasts of 77 cents. Kraft Heinz shares have fallen nearly 13% over the past 12 months. Of the 23 analysts covering the stock, 11 give it a buy or overweight rating, while 12 have a hold rating. The stock’s average price target is $39.40, according to FactSet data, with an upside potential of 13.2%. Healthcare Opportunities The healthcare sector is also “pretty completely overvalued,” but there are pockets of opportunity, Sekera said, naming Medtronic and GSK as two stocks he likes. “Medtronic is a four-star stock, trading at a 25% discount, it’s a high-quality company. And our equity team believes it’s probably one of the best-positioned medical technology companies for the continued aging of the baby generation. boom,” he said. Medtronic shares are down about 0.45% over the past 12 months. According to FactSet data, of the 33 analysts covering the stock, 15 have a buy or overweight rating, 16 have a hold rating and two have a sell rating at a price target of $91.08. This implies an upside potential of 7.9%. On GSK, Sekera noted that the London Stock Exchange-listed company is trading at a discount of 27%. Calling the company undervalued, Sekera said the Morningstar team believes the market “likely overestimates the company’s litigation costs for one of its products called Zantac,” which is used to treat heartburn. Reuters reported that some manufacturers and pharmaceutical companies stopped sales of Zantac in 2019 over concerns that its active ingredient, ranitidine, would degrade over time to form NDMA, a chemical that can cause cancer. As a result, the company has faced several lawsuits, the most recent of which will go to trial on February 20. The lawsuit was later dismissed after a confidential settlement was reached, GSK announced on Feb. 1. Over the past 12 months, the company’s shares have risen approximately 12.5%. Of the 23 analysts covering the stock, 11 give it a buy or overweight rating, 9 have a hold rating and 3 have a sell or underweight rating, an average price target of £1,781.77 ($2,110.23) , according to FactSet data. This gives it upside potential of around 6.3%.