In the list of "fallen angels" below, we focus on buy-rated stocks that fell sharply in the second quarter, asserts John Eade, analyst with Argus Research, a leading independent Wall Street research firm.

Our analysts believe the fundamentals remain intact for these companies, which could set up potential long-term buying opportunities.

ManpowerGroup (MAN)

ManpowerGroup is a provider of workforce solutions and services for over 400,000 clients and 3.4 million associates each year. 

The stock fell more than 14% following the 1Q18 earnings release on concerns about weak U.S. results, but we believe that this was an overreaction and note that management expressed confidence about a return to revenue growth in the U.S.

Skechers USA (SKX)

Skechers is an athletic shoe and accessories manufacturer and retailer. The shares fell sharply on April 20 after management issued disappointing 2Q EPS guidance, driven by higher SG&A costs.

However, the Skechers brand remains popular, ranking fourth in U.S. sales in 2017, and we believe that investors have overreacted to the lower-than-expected guidance. We also note that management expects weakness in 2Q to be offset by a strong third quarter.

In all, we believe that prospects for sneaker sales remain favorable and expect Skechers to benefit from strong industry fundamentals.

Tesaro (TSRO)

Tesaro, an oncology-focused biopharmaceutical company, acquires, develops, and commercializes cancer therapeutics and oncology supportive care products in the U.S. and internationally.

We believe that Tesaro could also be an acquisition target for a larger biopharmaceutical company, given its progress in drug development, strong market position, and reduced valuation.

Cardinal Health (CAH)

Cardinal is one of the nation's largest pharmaceutical and medical distribution companies. The Cardinal Health shares have declined as Amazon has decided to enter the pharmaceutical delivery business.

We expect sustainable earnings per share growth based on the company's ability to improve margins in both its Pharmaceutical Distribution and Medical segments.

Incyte (INCY)

Incyte is a drug discovery and development company. Our outlook for this emerging large-cap biotech firm is bullish (despite the recent failure of epacadostat in a major clinical trial), based on its solid late-stage pipeline, recent FDA approval of Olumiant, and R&D partnerships with other pharmaceutical companies.

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