Q: Hi, Celestica shares pulled back, over past 2-3 days, along with most AI related stocks. However, most of these names including CLS nicely bounced back today. I managed to start a small 1% position, yesterday at $59. Based on your favourable comments ( also in 5i Growth Portfolio), and as a strong beneficiary of the AI related future growth, I would be inclined to hold on to this as a core position and may be add more, over time. What is your view on its current valuation and where do you see the stock in, say 18-24 months from now ? Thanks
5i Research Answer:
While it is hard to predict future price moves over a short period of time (1-2 years), we continue to like the name and shares continue to trade at reasonable valuations (15.3X forward earnings). It has seen a nice run, and we would not be surprised by pullbacks in price along the way, but overall its growth is beginning to accelerate, it has a strong balance sheet, and its margins are expanding. If it continues to exceed analyst expectations for sales and earnings and benefit from AI spending, we feel that it is at an attractive valuation today and would likely see price appreciation in the coming years as its grows fast and trades at a discount to other high-growth tech names.