Group 1: Market Trends and Predictions - Veteran investor Louis Navellier warns against chasing the recent "junk rally" in low-quality stocks, advocating a return to quality stocks with strong earnings growth as the 2026 financial year begins [1] - Navellier predicts a "big flip" in January where quality companies with accelerating sales and earnings will regain market leadership, following a fourth-quarter mean reversion [2] - He highlights an increase in institutional buying pressure in data center stocks as an early sign of this trend [3] Group 2: Company Earnings and Growth Projections - Navellier is positioning his portfolio for the upcoming corporate earnings season, referring to it as "judgment day" for earnings [4] - Nvidia Corp. is identified as a top pick, expected to report a 66.7% increase in sales and a 71% jump in earnings, driven by new chip sales to China [4] - Palantir Technologies is forecasted to see a 64.1% earnings surge due to its role in AI implementation for government contracts [5] - Seagate Technology and Celestica are also highlighted as beneficiaries of the data center boom, with earnings expected to rise 37.6% and 58.1%, respectively [5] Group 3: Economic Outlook - Navellier expresses concern over the broader economy, predicting that deflation will be the primary story for 2026, rather than inflation [6] - He cites falling rental costs, declining condo prices, and low energy prices as indicators that the Federal Reserve should cut rates by at least 100 basis points to prevent a deeper economic slowdown [7] Group 4: Market Performance - In 2025, the S&P 500 increased by 16.65%, while the Nasdaq Composite and Dow Jones gained 20.54% and 13.38%, respectively [8] - The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF showed positive premarket movements, with SPY up 0.24% at $684.82 and QQQ up 0.52% to $616.29 [8]

Core Insights - Celestica, Inc. (CLS) has seen a stock increase of 21.6% over the past three months, slightly underperforming the Electronics - Manufacturing Services industry's growth of 22.4, while outperforming the Zacks Computer & Technology sector and the S&P 500 during the same period [1][8] Financial Performance - The company has outperformed peers such as Jabil, Inc. (JBL) and Flex Ltd (FLEX), with Jabil's shares rising 10.3% and Flex's shares increasing by 7.9% [2] - In the third quarter, revenues from the Connectivity and Cable Solutions (CCS) segment surged 43.2% year over year to $2.41 billion, driven by strong demand for 800G networking switches [3][8] - Management anticipates a continued revenue growth of 40% year over year in the CCS segment, supported by the increasing demand for robust networking architecture due to AI data center buildouts [4] Market Trends - The AI data center market is projected to reach $236.44 billion by 2025, with a compound annual growth rate of 31.6% from 2025 to 2030, driven by the digital transformation across various industries [5] - Major hyperscalers like Microsoft, Amazon, and Google are expected to accelerate AI data center buildouts, presenting growth opportunities for Celestica's 400G and 800G switch products [5] Capital Management - As of September 30, 2025, Celestica had $305.9 million in cash and cash equivalents, with a current ratio of 1.47, indicating a strong position to meet short-term obligations compared to the industry's 1.17 [6] Challenges - The company's revenue growth is heavily reliant on AI data center capital expenditures, which may be affected by macroeconomic headwinds and tariff-related uncertainties [9] - Persistent weakness in the ATS segment and elevated inventory levels in industrial markets are hindering net sales growth [10] - Customer concentration risk is significant, with 59% of total revenues derived from three customers, making the company vulnerable to changes in demand from these major clients [10] Valuation Metrics - Celestica's shares are currently trading at a price/earnings ratio of 35.51 for forward 12-month earnings, which is higher than the industry average of 24.54 [15] Strategic Positioning - The company's strong focus on innovation and strategic collaborations with industry leaders like AMD and Broadcom is expected to yield long-term benefits [17]

Core Viewpoint - Veteran investor Louis Navellier warns against the recent "junk rally" in low-quality stocks and advises a shift back to quality stocks with strong earnings growth as the 2026 financial year begins [1][2] Group 1: Market Trends - Navellier highlights a fourth-quarter mean reversion where previously underperforming stocks led the market, which he deems unsustainable [2] - He anticipates a "big flip" in January, where quality companies with accelerating sales and earnings will regain market leadership [2] Group 2: Stock Picks - Navellier's top pick is Nvidia Corp. (NASDAQ: NVDA), expecting a 66.7% increase in sales and a 71% jump in earnings due to new chip sales to China [4] - He is also bullish on Palantir Technologies Inc. (NASDAQ: PLTR), forecasting a 64.1% earnings surge as a leading "AI implementer" for government contracts [4] - Seagate Technology Holdings PLC (NASDAQ: STX) and Celestica Inc. (NYSE: CLS) are highlighted as beneficiaries of the data center boom, with earnings expected to rise 37.6% and 58.1%, respectively [5] Group 3: Economic Outlook - Navellier expresses concern over the broader economy, predicting deflation as the primary story for 2026, citing falling rental costs, declining condo prices, and low energy prices [6] - He argues that the Federal Reserve needs to cut rates by at least 100 basis points to prevent a deeper economic slowdown [6] Group 4: Market Performance - In 2025, the S&P 500 increased by 16.65%, while the Nasdaq Composite and Dow Jones gained 20.54% and 13.38%, respectively [7] - The SPDR S&P 500 ETF Trust (NYSE: SPY) was up 0.24% at $684.82, and the Invesco QQQ Trust ETF (NASDAQ: QQQ) advanced 0.52% to $616.29 in premarket trading [7]

Core Insights - Celestica, Inc. (CLS) reported an operating cash flow of $126.2 million for the third quarter, an increase from $122.8 million year-over-year, with total cash flow for the first nine months of 2025 reaching $408.9 million, up from $330.5 million in 2024 [2][9] - The company experienced a 43% increase in revenues from the Connectivity & Cable Solutions (CCS) segment, driven by demand for advanced networking products, particularly 400G and 800G switches, fueled by AI investments [3][9] - Celestica raised its free cash flow guidance for 2025 to $425 million, up from $400 million, supported by strong revenue growth and a stable cash cycle [5][9] Financial Performance - The inventory balance for Celestica was $2.05 billion, an increase of $226 million year-over-year and $129 million from the previous quarter, with cash cycle days improving to 68 days from 70 days in the second quarter of 2025 [4] - Free cash flow for the third quarter was $88.9 million, compared to $76.8 million in the same quarter last year, with capital expenditure at $37 million, representing 1.2% of revenues, below the expected range of 1.5-2% [5] Competitive Landscape - Competitors such as Sanmina Corporation reported a significant increase in cash flow, generating $199.1 million from operating activities in the fourth quarter of fiscal 2025, compared to $51.9 million the previous year, driven by growth in Communications Networks and Cloud Infrastructure [6] - Jabil, Inc. also showed strong performance with $323 million in net cash from operating activities in the first quarter of fiscal 2026, up from $312 million a year ago, and a free cash flow of $272 million compared to $226 million the previous year [7] Valuation and Estimates - Celestica's shares have increased by 223.5% over the past year, outperforming the industry growth of 105.1% [8] - The company trades at a forward price-to-earnings ratio of 36.51, significantly higher than the industry average of 24.37 [10] - Earnings estimates for 2025 have remained stable over the past 60 days, while estimates for 2026 have seen a decrease [11]

Industry Overview - The electronics manufacturing services (EMS) industry is currently ranked in the top 3% of the Zacks Industry Rank, indicating strong performance and potential for growth [1] - The industry has delivered a remarkable 98.1% return over the past year and an astonishing 105.9% year-to-date return, suggesting it is expected to outperform the market in the next three to six months [2] Company Highlights Celestica Inc. (CLS) - Celestica is one of the largest EMS companies globally, focusing on high-value markets and product diversification, which is supported by strong R&D capabilities [7][8] - The company is experiencing robust growth in its Connectivity & Cloud Solutions segment, particularly in its Hyperscaler Portfolio Solutions and optical programs, driven by increasing demand for 800G and 400G network switches [9] - For 2025, Celestica anticipates revenues of approximately $12.2 billion, up from a previous estimate of $11.55 billion, with expected non-GAAP adjusted earnings of $5.90 per share [12] - The expected revenue and earnings growth rates for Celestica are 31.4% and 39%, respectively, for the next year, with a 15.6% improvement in the Zacks Consensus Estimate for next year's earnings [13] Jabil Inc. (JBL) - Jabil is a leading global supplier of EMS solutions, benefiting from strong momentum in capital equipment, AI-powered data center infrastructure, and digital commerce [14][15] - The company plans to invest $500 million to expand its manufacturing capabilities for the AI data center vertical, enhancing its position in the AI hardware supply chain [17] - Jabil's projected revenues for fiscal 2026 are $32.4 billion, with expected non-GAAP earnings per share of $11.55 and over $1.3 billion in adjusted free cash flow [22] - The expected revenue and earnings growth rates for Jabil are 8.8% and 18.5%, respectively, for the current year, with a 4.5% improvement in the Zacks Consensus Estimate for the current year's earnings [23] Sanmina Corp. (SANM) - Sanmina is a global provider of electronics contract manufacturing services, focusing on complex components and end-to-end supply chain solutions across various industries [24] - The company is benefiting from strong demand in communications networks, cloud, and AI infrastructure, with a vertically integrated manufacturing process that streamlines operations and reduces costs [25][26] - For the first quarter of fiscal 2026, Sanmina expects revenues between $2.05 billion and $2.15 billion, with non-GAAP earnings per share estimated between $1.95 and $2.25 [28] - The expected revenue and earnings growth rates for Sanmina are 72.2% and 59.6%, respectively, for the current year, with a 38.9% improvement in the Zacks Consensus Estimate for the current year's earnings [29]

Core Insights - The company aims to provide alpha-generating investment ideas through a generalist approach, analyzing various sectors with perceived alpha potential against the S&P 500 [1] - The typical holding period for investments ranges from a few quarters to multiple years, indicating a long-term investment strategy [1] Research Approach - The company builds and maintains comprehensive spreadsheets that include historical financial data, key metrics, guidance trends, and performance indicators [1] - In addition to company filings, the company monitors relevant industry news and reports, as well as other analysts' coverage [1] - During significant events, such as CEO changes, the company conducts in-depth research on the leader's background and past performance [1] Valuation Methodology - The company rarely utilizes Discounted Cash Flow (DCF) models for long-term projections, believing they add limited value [1] - Instead, the focus is on assessing how a company has performed and the outlook on five key drivers of DCF valuation: revenues, costs and margins, cash flow conversion, capital expenditures, and interest rates [1]

Core Insights - Nvidia has been a major player in the AI computing infrastructure sector, but five other tech stocks focused on AI data centers have shown even more remarkable growth in 2025 [1][2] - The AI infrastructure spending by major tech companies like Amazon, Microsoft, Google, and Meta is projected to reach approximately $380 billion in 2025, with a potential 50% increase in 2026 [3] - The semiconductor market is expected to see significant growth, with a projected total value of $772.2 billion in 2025 and $975.5 billion in 2026, driven by AI infrastructure demands [7][6] Group 1: AI Computing Stocks - Lumentum is highlighted as a key winner in the AI computing supply chain, with its stock price increasing nearly 400% in 2025, driven by demand for optical components in AI data centers [1][11] - Western Digital's stock has surged nearly 300% in 2025, as AI data centers require massive storage solutions for large datasets [14][15] - Micron Technology, as a major U.S. memory chip manufacturer, is benefiting from the AI infrastructure boom, with its stock price rising approximately 240% in 2025 [17][20] Group 2: Market Trends and Projections - Analysts predict that the semiconductor industry will experience a "super cycle," with significant growth in AI chip, storage, and optical interconnect sectors [4][5] - The global AI infrastructure investment wave is expected to reach $3 trillion to $4 trillion by 2030, indicating a long-term growth trajectory for AI-related investments [5][19] - The demand for high-performance storage solutions, particularly HBM and SSDs, is expected to continue to rise, with Micron and other storage companies positioned to benefit significantly [18][21] Group 3: Company-Specific Developments - Celestica, a key player in manufacturing high-performance network switches for AI data centers, has seen its stock rise over 230% in 2025 [27][28] - Seagate's stock has increased by 231% in 2025, driven by the growing demand for HDDs and SSDs in AI data centers [23][25] - The competitive landscape between Google and OpenAI in the AI computing space is expected to benefit companies like Lumentum and Western Digital, as both companies require advanced storage and optical interconnect solutions [10][12]

Core Viewpoint - Celestica Inc. (NYSE: CLS) has experienced a significant increase in its stock price over the past year, but recent performance raises questions about its valuation relative to industry peers [1]. Group 1: Stock Performance - The current share price of Celestica Inc. is $308.31, reflecting a 1.60% increase in the current market session [1]. - Over the past month, the stock has decreased by 7.12%, while it has increased by 214.09% over the past year [1]. Group 2: P/E Ratio Analysis - The P/E ratio is a critical metric for long-term shareholders to evaluate market performance against historical earnings and industry standards [5]. - Celestica Inc. has a P/E ratio of 49.34, which is higher than the industry average P/E ratio of 37.98 in the Electronic Equipment, Instruments & Components sector [6]. - A higher P/E ratio may suggest that shareholders expect better performance from Celestica Inc. compared to its industry peers, but it could also indicate that the stock is overvalued [6]. Group 3: Caution in P/E Interpretation - While the P/E ratio is a valuable tool for assessing a company's market performance, it should be interpreted with caution as a low P/E can indicate undervaluation or weak growth prospects [9][10]. - Investors should consider the P/E ratio alongside other financial metrics, industry trends, and qualitative factors for a comprehensive analysis of a company's financial health [10].

Core Insights - Celestica, Inc. (CLS) reported quarterly revenues of $3.19 billion, reflecting a year-over-year increase of 27.8%, surpassing management's guidance and the Zacks Consensus Estimate by $170 million [1][8] Group 1: Company Performance - The growth in revenue was driven by strong demand in the Connectivity and Cable Solution portfolio, which saw net sales surge 43.2% year over year to $2.41 billion, primarily due to the demand for 800G and 400G switching products [3][8] - Celestica's management is optimistic about future revenue growth, projecting revenues between $3.325 billion and $3.575 billion for the next quarter, indicating a potential 36% year-over-year growth [4][8] - The company's shares have increased by 215.6% over the past year, significantly outperforming the industry growth of 93.7% [7] Group 2: Market Opportunities - The global data center networking market is valued at $38.49 billion in 2024, with a projected compound annual growth rate of 17.2% from 2025 to 2033, presenting a substantial growth opportunity for Celestica [4] - Celestica is actively collaborating with industry leaders like AMD and Broadcom to enhance its product offerings in the expanding AI infrastructure market [2] Group 3: Competitive Landscape - Competitors such as Jabil, Inc. and Flex Ltd. are also performing well, with Jabil reporting revenues of $8.3 billion, up from $6.96 billion year over year, and Flex generating $6.8 billion, up 4% year over year [5][6] - Jabil's growth was driven by demand in Capital Equipment and AI-related Cloud and Data Center Infrastructure, while Flex's diversified portfolio across multiple industries remains a key strength [5][6] Group 4: Valuation and Earnings Estimates - Celestica trades at a forward price-to-earnings ratio of 37.68, higher than the industry average of 24.13 [9] - Earnings estimates for 2025 have increased by 6.3% to $5.90, and for 2026, they have risen by 20.9% to $8.20 over the past 60 days [10]

Core Insights - Celestica (CLS) has evolved from a lesser-known contract manufacturer to a significant player in the AI infrastructure sector, indicating a substantial transformation that the market may still be undervaluing [1] Company Overview - The company is positioned as a critical enabler of the AI infrastructure boom, suggesting strong growth potential in this emerging market [1] Investment Philosophy - The investment approach highlighted emphasizes growth prospects and the potential for high profitability within 1-2 years, aligning with the company's current trajectory [1]