Celestica Inc (CLS.TO)

A comeback story that has done better than expected. Has come back to the same level that it was in 2011. This is a seasonal period when you get these types of industrial stocks doing well. Right now it is in an upper trend and given where we are right now, he feels this is a favourable trend. Once it’s through the $11.90 level he expects it to do quite well.

(A Top Pick Sept 28/12. Up 66.43%.) Had a very strong quarter but was mixed in terms of their guidance. They were exiting the BlackBerry business and people were really worried if they were going to be able to replace it. However, they have started to replace it with higher margin business. Going forward, he feels their margins are going to increase. Has exited most of his position but still has some in one of his funds.

Very hinged to data communications and telecom equipment cycle, which he thinks, is just starting to rejuvenate itself. Feels it has 5 to 10 years of fantastic growth ahead of it. Not very expensive.

One of the Canadian technology companies. Has been showing improvement of late. If you take their cash into account, they are trading at about 8X earnings. Generates a ton of free cash flow. When a company has a big cash flow, they either buy back stock, make a dividend or make an acquisition. This company has been very clear that they want to get into a more diversified segment outside of communications, higher margins and more growth.

Lost their phone contract with blackberry but a year ago they said they were moving away from designing and making of cell phones and were moving into the medical and aero spaces. The advantage is, it takes a long time to get into those industries but once you are in, you are there for 7-10 years. A free cash flow generating machine. Have $554 million in cash, 29% of the market cap of the company.

(Top Pick Sep 28/12, Up 39.26%) Replaced RIM with higher margin business. He has taken quite a bit off the table. But it is still not an expensive stock. They may pay a dividend this year. Great balance sheet. He thinks it is fairly valued.

They have a lot of cash on the balance sheet; the amount of cash they generate. They have land value. If you take that up they are trading at 8 times earnings. They are not anywhere near highs. As margins go up with acquisitions, the share price should go up.

(Market Call Minute) Great cash flow and a catalyst in the next 3 to 4 months.

Do manufacturing and design work for large electronics companies. Doesn’t like the industry. Historically has been an extremely low margin business. It requires a fair bit of cash. Very price competitive. Doesn’t see any real great growth prospects.

Instead of dividends, historically this company has favoured buybacks. Have a lot of cash in the balance sheet. Priced cheaply at around 8X earnings. Generates quite a bit of cash flow. Raised their 2^nd quarter guidance and are talking about taking market share from competitors. In this sector, the tide shifts pretty quickly and contracts can go to somebody else.On his watch list.

Contract manufacturing industry for the electronics area has become very, very difficult. A really low margin business. Has had pretty poor ROIC’s over time. Not a big fan of this one.

Electronic manufacturing of other companies products. Was very popular in the late 90’s for companies that design products to get out of low margin manufacturing. Has been a very difficult business for a very long time. This has caught his interest. Remarkably cheap. Have been slowly improving. Suffered awhile from their large exposure to Blackberry but have mostly migrated through this.

Has just added this to one of his funds. Generating a lot of free cash flow and it’s cheap. Ramping up their diversified business in health care, defence spending, etc. Good Value play.

Been in a tough business for a long, long time. Margins remain very tight because of so much competition. Doesn’t see it as being an attractive industry. Prefers companies that have branded products that have been beaten up, but the brand is solid and the business model works as opposed to contract manufacturing.

Low margin business, but lots of cash. Doing a big share buyback and that will help the bottom line. A dividend would be nice. He is sitting on the side lines waiting for improvements in the economy. They have struggled as the economy has slowed down.