Illuminate profits with Illumina

I always begin my search for good investments by screening on Barchart for those companies hitting the most new highs recently. Illumina (ILMN) has had price appreciation on 15 of the last 20 trading sessions and is 5 for 5 recently. There has been a 57.01% price appreciation in the last 65 days.

ILMN is a developer of tools for the analysis of genetic variation and function. Hopefully, that information that could be used to improve drugs and therapies, customize diagnoses and treatment, and cure disease. Molecular medicine is a new and growing field. I've heard Warren Buffet advice that you shouldn't invest in a company you don't understand but although everything that they do might be over my head I do know that the analysis of DNA to fight both inherited and acquired diseases and viruses is the direction medicine is headed. Not everything can be cured with an antibiotic anymore.

Of the 15 analysts following this stock 10 of the 15 have buy recommendations in with the other 5 giving holds. They are looking for a 22.5% increase in sales next year and a 35.1% increase in EPS. Their expected 5 year compounded EPS growth rate of 19.98% is a big reason to consider this as a long term holding.

On a technical basis Barchart's 5 short term technical indicators all signal buy. Other sites like Wall Street Survivor have rating of a 5/5 Survivor Sentiment rating, a 5/5 technical rating and a 5/5 fundamental rating. Motley Fool CAPS members think the stock will outperform the market by a vote of 536 to 43 with the All Stars in agreement 192 to 13. The Wall Street columnists that Fool follows give it a 16 to 1 vote. The lone dissenting vote is from Jim Cramer and he hasn't reviewed the stock since February 2007. The stock has increase 117.16% since then.

Recommendation: This stock has it all. They are on the cutting edge of medical research. They have great fundamentals with analysts predicting increases in both sales and earnings. I do have one reservation. In the last quarter there has been an increase in short interests. Because of this please keep your stop losses tight. The stock can be purchased around 43 and set your initial stop loss no lower than 30 and be prepared to move it up to keep this trade profitable.

Disclosure: I hold no positions in Illumina at the time of publication

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com