I’m stuck on biotech stocks right now for several reasons.

One, they’re strong; many have earned spots in Cabot Top Ten Report in recent months.

Two, many actually boast growing earnings trends.

Three, the group has failed many times in past decades to put together a lasting advance, so maybe now is the time.  Psychologically, the fact that so many people are skeptical of biotech stocks is a big plus.

Four, there will be tremendous demand for health-improving products as baby-boomers age; biotechnology offers the best chance we have to stay healthy.

So take a look at Illumina (ILMN), the leading provider of the machines used to do genetic research.  Whether it’s researching the genetic links of disease or developing new drugs, Illumina is there.

In a recent issue of Cabot Market Letter, editor Michael Cintolo wrote, “Illumina is a leading maker of equipment for genetic analysis and business is great.  The company’s quarterly report on July 23 was a grand slam, with higher revenues and earnings than analysts had expected, plus a full-year profit forecast that handily topped expectations.  Illumina is hardly unknown to investors, but its ability to routinely surpass expectations is remarkable.  Part of the secret is the strong sales of consumables that follow each sale of an analyzer … the long-term prospects are excellent for this technology leader in the business of analyzing genes.”

I look at it today and I see a company with revenues of $140 million in the last quarter, up 66% from the year before, and earnings of $0.44, up 52%.  The stock has just pulled back from its high of 96 to a small base at 90, and I think it’s a good buy here.