I talk a lot about being locked and loaded with the very best stock as we come into earnings season. These are the companies that have strong sales and revenue growth and have been posting positive earnings surprises. Analysts are raising their estimates for these best stocks.
The large institutions have noticed the strong fundamentals, and there is strong buying pressure in the shares. No matter how much I talk about owning these powerful stocks there is always someone who is concerned that the highly rated stock is too expensive and all the good news is baked into the stock price.
I am a numbers guy, and the numbers tell me that these are the stocks that lead the market higher. So, it is important to set aside these unconfirmed fears and own the best stocks, which includes Illumina. Here’s why:
Illumina (ILMN)
Let’s consider Illumina (ILMN) as a great example of what happens when you approach earnings season with an “A-ranked” in Portfolio Grader. Illumina has been a “strong buy” for almost a year now, and while ILMN stock has made a nice move almost doubling during that time, the fundamentals just keep getting better.
Illumina makes the tools that scientists need for gene sequencing and molecular research. These tools are used to conduct research that was thought impossible just a few years ago. The research conducted using Illumina products can help us defeat diseases and conditions that have plagued mankind since the dawn of time.
Illumina posted yet another positive earnings surprise in the latest quarter. Wall Street was looking for earnings-per-share of just 57 cents, and after adjusting for one-time items, Illumina reported earnings of 77 cents per share, delivering a 36% positive surprise. ILMN earnings tripled the 22 cents per share from the same time last year.
Revenues rose sharply to $481 million up from $357 million in 2013. Margins exploded higher to 69.5% compared to 58.8%. Illumina also told investors that business was so good they were raising their estimates for the rest of the year.
Illumina now increased its full year 2014 guidance to revenue growth of about 30% year over year and non-GAAP earnings per fully diluted share of $2.63 to $2.65. It was perfect quarter for Illumina, and all over Wall Street, analysts were raising their estimates and price targets for ILMN stock. Illumina stock is up 15% since its Q3 report came out.
Owning the very best stocks is the best strategy for earnings season as these are the companies that will report outstanding results and attract powerful buying pressure that moves the price higher.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
