Celestica Inc (CLS.TO)

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.

A custom manufacturer of electronics. Their manufacturing of RIM products is coming off contract so it has risks to it but it is also extremely cheap. Recently announced a share buyback. Feels that management realizes that if they can shrink capitalization, returns will improve.

(A Top Pick April 23/12. Down 12.08%.) Got stopped out at $8.18 at a loss of 2.2%.

They lost a contract recently and another a while back. They are doing buy backs but he wishes they would give a dividend instead. Just a blue blood company. A lot of the board are overpaid. A lot of business was RIM-based. Loosing this really hurts. When he filters again, this one might come up.

Strong balance sheet. Research in Motion (RIM-T) was their largest client and will be stopped in the next quarter or so. It was a lower margin business with them. Thinks it has been oversold. Stock is $7 and they have $2.90 in cash per share. Analysts expect them to earn $.88 this year so if you strip out the cash, the stock is trading at about 4.5X earnings. Thinks you’ll be able to see $10.

Well managed company. Overhang from Research in Motion (RIM-T) business has disappeared. It was 19% of their business and they were carrying a lot of inventory for them. Much more diversified than it used to be. Looking at defence, consumer electronics and it’s got servers. Growth rate will not be dramatic. Have some capacity to develop now that RIM is gone which he expects will have a slight effect on margins. Potential for some significant margin improvement. Really cheap compared to the other EMS manufacturers.