CLS' revenues are roughly double that of what they were in 2000, and its share price is about the same as the peak from 2000. It has seen strong sales growth in recent years as a result of increased AI demand, and its enterprise segment. Its recent run has been impressive, but this is partly due to its previously cheap valuation of 6.5X forward earnings in FY2022, to now 21X forward earnings (still considered as being reasonable within the high-growth tech sector).
Following 2000, CLS, despite trading at a reasonable valuation, saw sales drop drastically as the capital markets dried up and companies cut back on tech and infrastructure investments. There could be some parallels drawn to today's environment, where companies are ramping up their AI spend, but we feel there are many structural differences that lead these two time periods to be quite different.
By 2000, tech was just beginning to scale up and have a large impact on the world, but a lot of infrastructure was still being built out. Today, every company relies on tech to operate, and a complete collapse like we saw in 2000 would be catastrophic for the global economy, which is why this is a highly unlikely scenario. From Jan 1986 to Jan 2000, the Nasdaq 100 returned a 27% CAGR in those 14 years, whereas over the past 14 years till today, the Nasdaq 100 has returned an 18% CAGR - the difference between a 28X return vs. a 10X return in the same timeframe.
We would look for a slowdown in growth in CLS or reduced guidance for any indication that the tide could be turning. We would also be comfortable taking profits along the way.