MarkGillCPA

Illumina Boomerangs Up, Announces Genome Sequencing

I realize this is an exercise in hindsight, but I find that sometimes it pays to do a post mortem on previous ideas. I think ILMN is an interesting company, but it has to be bought when the stock has been beat up. If you bought the breakout based on this chart you are now down 15% as ILMN announced yesterday that sales would be lower than expected. At 39.76 (closing price on above chart) ILMN was trading at 44 times this year's expected EPS of .90 and 33 times next year's expected EPS of 1.21. The EV/EBITDA was 27x. ILMN was expensive by any measure. When expensive stocks get hit with some bad news, the stock gets hammered. If you're a technician, instead of buying breakouts, why not use a slow stochastic crossover below 20 on a weekly chart. That would have you buying when ILMN was at 20 last Nov or Dec and the valuation was at 22x and 16.5x 2010 EPS, and you could be selling now with a 70% gain.