Q: Hi Team,
What are your thoughts on the company's current valuation and it's future prospects?
Do you believe this could be a long term compounder? Would you be comfortable buying it here?
Thanks,
What are your thoughts on the company's current valuation and it's future prospects?
Do you believe this could be a long term compounder? Would you be comfortable buying it here?
Thanks,
5i Research Answer:
Due to the fairly cyclical nature of its business, and the CAPEX cycles that companies go through, we would not really consider CLS to be a long-term compounder, but it has shown strong fundamentals over the past couple of years. CLS continues to benefit from enterprises spending on AI and forward growth estimates factor this in. Considering its strong performance, it still only trades at a 15X forward earnings multiple, and analyst estimates continue to rise. We like the name and would be comfortable buying here, while being mindful of its high volatility and risks of a cyclical downturn in AI-spending.