Celestica Inc (CLS.TO)

They cleaned up their balance sheet and bought back a lot of shares, but when they hit on the AI data centre theme, it took off. Their last quarter was great. Growth is there and their valuation beats almost all other data centre stocks. Are growing their backlog. You can buy it now.

He follows this, is on his shopping list. It's a great AI connectivity stock. Their CCS segment saw massive demand in 2024, increasing market share. They project revenue this year just under $10 billion. Margins in this sector are slim, so volume is key, which CLS is good with.

Extremely volatile chart. Second half of last year was absolutely awesome, then a big selloff down 30% in a day because of DeepSeek, and a recovery bounce back. The tumble afterward is concerning. Near bottom of his RSI rankings. Trying to come back, so far so good.

What a ride since last summer, but look at the fall. Lost 50% in a couple of months. Management is great, wonderful execution. Caught up in euphoria of AI and chips -- now it's the deflation of that craze, similar to 1999-2000.

Volatile recently with NVDA's results and chip worries. A bet on AI. Spectacular results. Growing quickly, reasonable valuation. He'd prefer a higher-quality US name and less of a derivative play.

Recent concerns over what was going on in China and DeepSeek, and everything rolled over. Supply-chain solutions around the world. Still good runway to price target.

Volatile the past year, though paying great returns. After a sleepy history, it is now benefitting from the AI build-out as it works with Broadcom. The recent downturn is tied to headlines of a slowdown in building date centres. Ultimately, revenues will increase over 2-3 years, and the 2028 outlook will drive this stock higher.

Analyze companies day by day, ask if it's still meeting expectations. He owns this one in his Canadian portfolio, and in his US small-cap. Last week, it reaffirmed 2025 growth expectations. More than 1/2 its business is directed at data centre development. Parabolic move, but fundamentals have also grown very well. Valuation still undemanding. 

Keep an eye on it, and don't get carried away with price momentum. Trim if it gets too big a position in your portfolio. There's a difference between a trim (portfolio management) and a sell (based on fundamental value).

It continues to work, even weathering the DeepSeek storm earlier this week. His only concern is on the semiconductors, SMH and SOXX. This name is part of that group, and the group is lagging the broader market. If the broader semi space comes under pressure, CLS will likely follow suit.

CLS traded at a forward P/E of below 10X for years until 2023 when its AI segment began generating significant growth. Its forward P/E has climbed to 24X, and for a company with steady margins and expecting to grow earnings in the 20%+ range for the next couple of years, we believe a forward P/E in the range of 20X to 25X makes sense. A 30X forward multiple could be justified if management guides for higher growth rates and it can execute on expanding its profit margins. Much of this also depends on the sustainability of the AI story and if we eventually witness a CAPEX down cycle for data centers and chips. Overall, we continue to like the name here.
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His 12-month price target is $138, and today we're at $143. Today's reporting is going to have to be pretty spectacular, or it's going to encourage more selling. Up$7 today. He'd take 1/4 or 1/3 off right now.

Makes all kinds of support products for AI chips, if not the chips themselves. For example, all GOOG's data centres use its technology. Totally comfortable owning it now for a 2-3 year ride. Buy high, sell higher.

Lots of opportunity. Ability to monetize AI has really helped customers. Going gangbusters. Runway is far out, both on fundamentals and on price.

He's wanted to own this for a while. They provide supply chain solutions, which is topical. Now, the price is too rich. Earnings are coming up, so wait for that. 

An amazing chart, but be cautious adding at current levels.