Opinions
Larry Berman CFA, CMT, CTA
Celestica Inc
CLS-T
RISKY
Jun 30, 2025
Stock price when the opinion was issued
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Great Canadian success story. Positioned themselves well to benefit from the AI trend and data centre buildout. Benefiting from semiconductor companies spending huge amounts. Not cheap, but not egregiously overpriced. Huge run, but earnings momentum is there. Take a bit off the table.
In general, margins for contract manufacturers are very thin. But this name's on a roll. Great space, as the world will continue to build data centres. Very strong earnings momentum. Consistent upgrades to earnings estimates, which is what you want in a growth stock. Better than 98% of companies in the S&P over last 52 weeks.
A bit stretched above MAs, may be susceptible to a miss. Reports in 11 days, and no sign that it has big risks.
We would be comfortable today as long as an investor has a 3 year+ timeframe to hold. Funamental momentum is very positive and the recent quarter showed an acceleration of growth.
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Lots of investors are taking profits, generally, now that earnings season is over. Needed a strong stomach for this one; in April, was under $80. He can't even recommend writing some calls, as he's been doing that and it's not working ;) He ended up having to buy the calls back, as he didn't want to get called away.
Don't trim. Hold on, and use a stop of around $250.
Have done a super job to be front and centre in data centres, both back and front end. But this is still cyclical. He sold it after a tremendous run, but left money on the table. The valuation is way at the high end around 40x earnings. This has gone from one extreme to another.
Already trading 30% above what analysts think it's worth a year from now. In momentum mode. If you're going to trade and buy at the breakout here, you have to be very sensitive to a correction at some point as seen in the chart in February. That's the environment we're in when you're chasing new all-time highs on a name.
He's a value guy. He likes to buy on a pullback, not when a stock's breaking out to all-time highs. That's just his style, doesn't mean it's right and other ways are wrong.