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Illumina (ILMN) Showing Signs Of Being A Momo Momentum Stock

Stock quotes in this article: ILMN

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Illumina ( ILMN) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Illumina as such a stock due to the following factors:

  • ILMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $389.9 million.
  • ILMN has a PE ratio of 160.4.
  • ILMN is currently in the upper 30% of its 1-year range.
  • ILMN is in the upper 25% of its 20-day range.
  • ILMN is in the upper 35% of its 5-day range.
  • ILMN is currently trading above yesterday's high.
  • ILMN has experienced a gap between today's open and yesterday's close of 1%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on ILMN:

Illumina, Inc. develops, manufactures, and markets life science tools and integrated systems for the analysis of genetic variation and biological function in North America, Europe, Latin America, the Asia-Pacific, the Middle East, and South Africa. ILMN has a PE ratio of 160.4. Currently there are 8 analysts that rate Illumina a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Illumina has been 1.4 million shares per day over the past 30 days. Illumina has a market cap of $17.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.09 and a short float of 25.3% with 8.47 days to cover. Shares are up 27.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Illumina as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 24.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has significantly increased by 62.28% to $83.14 million when compared to the same quarter last year. In addition, ILLUMINA INC has also vastly surpassed the industry average cash flow growth rate of 9.18%.
  • ILLUMINA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ILLUMINA INC increased its bottom line by earning $1.13 versus $0.62 in the prior year. This year, the market expects an improvement in earnings ($1.78 versus $1.13).
  • The gross profit margin for ILLUMINA INC is currently very high, coming in at 74.64%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.78% trails the industry average.
  • Compared to its closing price of one year ago, ILMN's share price has jumped by 147.59%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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