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By Jason Stipp and Jeremy Glaser | 06-28-2012 04:00 PM

Judgment Days in the Market

Morningstar markets editor Jeremy Glaser sizes up the investment impact of recent court judgments and corporate judgments calls.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five.

In case you've been off the grid, there were several big judgments this week. Here to offer some details is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Jason, I'm no Judge Judy, but I'll try to give you my best judgment on these five today.

Stipp: Well, I appreciate it. What do we have for The Friday Five this week?

Glaser: Well, this week we're going to talk about the Supreme Court, Best Buy, Google, News Corp, and finally Coca-Cola.

Stipp: I think we have to start with the big one. The Supreme Court on Thursday upholding most of the new health-care legislation. Our analyst commented on that. What's the take on the investment front?

Glaser: We've certainly been waiting for this ruling for a really long time, and I think that a lot of health-care investors and health-care companies have really been holding their breath waiting to see if the ACA was going to be upheld, if Obamacare was going to be upheld, and if they were going to need to make all these changes, to get prepared for new regulations, new taxes, or if they were going to go back to the way things were before and wait for new legislation in the coming years.

And I think now that the law has been upheld and given the amount of political gridlock in Washington--and without the prospect of that really easing probably even after the November elections--it seems like the companies now know what they're working with.

In talking to our analyst Matt Coffina and others on the health-care team, they really think that how the law is going to impact the investment case is going to depend a lot on the subsector. For managed care they think it could be a net positive, given that there is going to be lots of new customers for them, even though they will probably have to provide higher levels of benefits and some caps on what kind of premiums they can charge.

On the other side, device manufacturers might be pinched a little bit more with higher taxes but possibly not a ton of new customers in that space.

So overall, there isn't a big change in valuations, there isn't a big change in our take on the health-care sector. We had assumed that the law was going to go through, and that these types of modifications were going to happen. So certainly for health-care investors, it eliminates some of the uncertainty, but it could be really decades before we see the full impact of what this law is going to do.

Stipp: In the consumer sector, Best Buy making the judgment that they might do a better as a private company. They've certainly been struggling recently. What do you think the impact is, and what's behind this decision?

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