Celestica Inc (CLS.TO)

Radical transformation a few years ago. Its components are right in the wheelhouse of data centre growth, and he finds it difficult to know how long that will last. His main issue is the stretched valuation.

His go-to name in the space is TSM, also at a high valuation now.

A winner in the AI build-out: cloud infrastucture, high-speed networking and other AI-related systems. Also, they supply aerospace/defence where defence budgets have increased. Third, they're in healthtech devices. All businesses are drivers, especially AI. A lot of growth is baked into the stock, but buy on any dips, on headline about any data centres being delayed.

Instead, they own AVGO in their global fund. CLS is sort of riding the coattails of AVGO by packaging components to sell to the end consumer. Benefiting from growth in TPUs that AVGO and GOOG have been delivering. Thinks that trend will continue.

Two years ago, traded at 10x PE. Now trades at 30-35x. Lots of other companies out there do this type of work. In an eventual slowdown, may see margin and volume pressure. Could be quite volatile from here, and he'd take profits so you're just left with the house's money.

Very expensive at these levels (especially for a manufacturing company), don't buy here. Thinks we'll get a pullback, especially if there's a hiccup with all the AI stuff. New money is better spent in other areas.

Greatly benefits from the AI trade, but now at a premium valuation. Has executed well.

A long position for him. Winning in its marketplace. Supplying data centre development. If there's risk to data centres, then there's risk to this name. Trading above the 50-day MA. He's going to keep it on a pretty tight leash. Wouldn't buy today. Technically, challenges on the AI trade right now.

Doesn't like the way the NASDAQ opened up 2.4% early this morning and then reversed and is now down on the day. Not a great technical sign.

Has rode the AI boom. Alphabet is a major customer. CLS was in the right place at the right time. These stocks are volatile, but CLS has moved up a lot. Still a little upside. You could trade the volatility or take some profits.

Great run for him, and has now sold (probably too early :)  His issue is that we're going to hit a point in the buildout of the data centres where we've overbuilt capacity. And then a lot of these stocks are going to come down pretty dramatically. 

You only have to look back earlier this year to the DeepSeek rumour of a cheaper way to do AI. At the time, CLS was trading ~$200, and in a heartbeat it was down to ~$100. CLS is in a low-margin business; traded 10-12 PE for years, now 40x PE. Fantastic run, won't last forever, take some profits.

With it trading around $509 today, you have to chuckle at the average analysts' price target. If you own it, hold, but use those trailing stops. Next big support is right around $450; if it goes below, then something's going on.

Quite the runup. Certainly wait for a healthy pullback to get in. Building the hardware backbone of AI. Revenue has grown 25% YOY. Profitability keeps surprising with record-high margins. Winning orders and executing efficiently. Not a hyped story by any means. Guidance raised again after other clean beat.

They call this a blue sky chart. From a technical perspective, there's really nothing he can say. There are no resistance or other points to comment on. You have to look at other factors. Has done extremely well with the whole data centre buildout. At some point these companies become very sensitive to negative news.

At this point, he himself would be more inclined to put new $$ into an ETF that represents the broader space. 

Analyst estimates continue to trend higher, sales and earnings growth are strong, and margins are expanding. It trades at a forward earnings multiple of 44X, which is not cheap, but this is a company that is benefiting from the AI revolution and we think management has executed well. At the first sign of a potential slowdown in AI Capex spending, we think these names could get hit, but we also believe it is sitll relatively early in the AI movement. For a long-term hold, we would be comfortable adding here.
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Great performer, and for good reason. In the right spot. Benefiting from data centre buildout, automation, and healthcare. Strong operationally. Will be an important Canadian stock for a long time. He'd buy here, even though it's up a bunch.

Benefits from AI build out. Sees 6% upside.  Scores 2/10 in value, 8 in fundamentals. Buy pullbacks. The momentum is already priced in.

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.