Trade-Ideas LLC identified

Illumina

(

ILMN

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $126.4 million.
  • ILMN has traded 332,413 shares today.
  • ILMN traded in a range 236.5% of the normal price range with a price range of $7.85.
  • ILMN traded below its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ILMN:

Illumina, Inc. provides sequencing and array-based solutions for genetic analysis. The company's sequencing by synthesis technology provides researchers with various applications and the ability to sequence mammalian genomes. ILMN has a PE ratio of 54. Currently there are 4 analysts that rate Illumina a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Illumina has been 1.2 million shares per day over the past 30 days. Illumina has a market cap of $22.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.68 and a short float of 5.9% with 8.12 days to cover. Shares are down 21.8% 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.63, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ILLUMINA INC is currently very high, coming in at 75.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.66% is above that of the industry average.
  • ILLUMINA INC's earnings per share declined by 34.8% in the most recent quarter compared to the same quarter a year ago. 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 $3.10 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($3.38 versus $3.10).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market on the basis of return on equity, ILLUMINA INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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