Its trend in sales and earnings has really begun to accelerate over the past few years, whereas it saw mostly stagnant sales for the two decades prior. The company has also managed to expand its margins over the past few years, whereas margins were largely flat previously. Its free cash flows have also demonstrated nice expansion in line with its sales and earnings improvements. Its enterprise segment has been growing significantly (+46% year-over-year), and this consists of its servers and storage businesses, which has been benefiting from the rise in AI demand. From a valuation standpoint, the company remains at an attractive valuation (15.5X forward earnings and 0.6X forward sales).
CLS also benefits from the aerospace and defense, industrial, health tech, and capital equipment industries, but if AI demand slows significantly, CLS would likely see a decline in its forecasted growth, and this would be a considerable risk for the company.
It is now a $7.6B company, with a relatively cheap valuation, and good fundamentals. We would be comfortable holding for a 5-year plus position while acknowledging its smaller size and position sizing.