Celestica Inc (CLS.TO)

(Top Pick Jun. 10/14, Up 11.79%) There are good long term growth prospects but he got out because it did what he wanted it to do for him.

Canadian technology companies in general are really doing well. This company is delivering on their numbers.

This is cheap at 6.3X enterprise value to EBITDA. 13% ROE forecasted for 2015. Has over $500 million in cash, which is about 27% of their market value. Huge free cash flow generator of over $164 million over the last 12 months, and an 8% free cash flow yield. Thinks it is breaking out. Above $14 is the point where, on large volume, you wait for that and then be an aggressive buyer.

(A Top Pick Nov 20/13. Up 21.64%.) This company was really keen, had spare capacity. Given the high cost structure, you need more business to come online to get your margins where you want them. There is still quite a bit from this. They haven’t really fired on all cylinders. It is always some part of the business that hasn’t seen the demand that they have wanted. Very attractive on a valuation basis, given the cash on the balance sheet.

Has never been comfortable with the story. They are an outsourcer with very low margins. They are still growing on a global basis, however. They are manufacturing, not technology. He would have a look at it if it was below $12 [which it is now].

(A Top Pick Aug 27/13. 12.07%.) It was extremely cheap when he bought it. They had a lot of cash and were buying back a lot of shares. Margins are starting to grow from the diversified business. Sold his holdings.

(A Top Pick Aug 2/13. Up 7.75%.) Thinks this is still a Buy. Has broken out of a very long sideways base of 10-12 years. Gradually transitioning from a handset manufacturer towards medical and aerospace, where there is less competition.

Impressive balance sheet. In the right space. Got whacked when BlackBerry (BB-T) pulled their business, but they seemed to have replaced that with other stuff. Great capital management. The problem is that it is such a low margin business and there is no moat to their business. It is very tough for him to Buy this company.

Just reported earlier this week. Numbers were good, but softer than people expected. He exited at $10 at his previous employer. He owns just a little bit. You won`t be hurt by this story.

Have done a pretty good job of turning things around. They were in dire straits in the recession when they had overcapacity and their balance sheet wasn’t that great. Have bought back a ton of stock, and are now basically waiting for the economic situation to come to them. This is a later cycle economy stock. When business is so good in the tech world and people need third-party manufacturing that is when they really start to coin. Because they bought back a lot of stock, their earnings leverage will be really good at that point in the cycle. Still a little early for this kind of scenario, but for a 2 or 3 year time frame, you should be okay. Not a bad company.

Not a name he has looked at in the long time. We are going through a correction like a lot of tech stocks. There is a lot of support around $10.40 from the beginning of the year. If it goes much below that it could be very damaging.

Model price is $21.39, 57% upside. Had positive news in terms of earnings. He likes it and thinks it will go higher. They would do well if they could sign on some long term business.

(All 3 Top Picks are 1) out of favour 2) high Short position and 3 ) displaying positive relative performance. An ideal setting for a Short Squeeze.) This has a Short position of 18.2%. Chart shows the spread widening and breaking out, between this and the TSX. That would probably cause the Shorts to start covering.

Came out with some really good earnings last quarter. He knows that they had issues with her communications sector, and there is a bit of a downturn. Their solar hasn’t worked out all that well. We need to see more Top End of this company. There are so many other companies out there that he is not looking at this or buying. There needs to be a bit more growth.

Has a lot of cash on the balance sheet. Without that you are trading sub-11 times earnings. They lost RIM business, but as they book more business it will add to valuation.