Company Overview - Celestica is one of the largest electronics manufacturing services companies globally, headquartered in Ontario, Canada, serving original equipment manufacturers and various service providers across multiple industries [11] - The company offers a wide range of manufacturing and supply-chain solutions, including design and development, engineering services, electronics manufacturing and assembly, and IT asset management [11] Investment Insights - Celestica holds a Zacks Rank of 3 (Hold) with a VGM Score of A, indicating a solid position in the market [12] - The company has a Momentum Style Score of B, with shares increasing by 30.4% over the past four weeks [12] - Recent analyst activity shows three analysts have revised their earnings estimates higher for fiscal 2025, with the Zacks Consensus Estimate rising by $0.27 to $5.05 per share [12] - Celestica has an average earnings surprise of 7.4%, suggesting potential for positive performance [12] Conclusion - With a strong Zacks Rank and favorable Momentum and VGM Style Scores, Celestica is positioned as a noteworthy option for investors [13]

Core Insights - The article highlights the investment strategies and achievements of Paul Franke, a seasoned investor with 38 years of trading experience, emphasizing his contrarian stock selection style and algorithmic analysis [1] Group 1: Investment Strategies - Paul Franke developed a system called "Victory Formation," which focuses on identifying supply/demand imbalances through specific stock price and volume movements [1] - The "Bottom Fishing Club" articles target deep-value stocks or those showing significant upward technical momentum reversals [1] - "Volume Breakout Report" articles analyze positive trend changes supported by strong price and volume trading actions [1] Group 2: Performance and Recognition - Franke was consistently ranked among the top investment advisors nationally during the 1990s and achieved the 1 position in the Motley Fool® CAPS stock picking contest in 2008 and 2009 out of over 60,000 portfolios [1] - As of September 2024, he is ranked in the Top 3% of bloggers by TipRanks® for 12-month stock picking performance over the last decade [1] Group 3: Risk Management - Franke advises investors to implement stop-loss levels of 10% or 20% on individual stock choices and to maintain a diversified portfolio of at least 50 well-positioned stocks to enhance regular stock market outperformance [1]

Group 1 - Ericsson is part of the Computer and Technology sector, which includes 607 companies and ranks 8 in the Zacks Sector Rank [2] - The Zacks Rank model indicates that Ericsson has a Zacks Rank of 2 (Buy), with a 21.4% increase in the consensus estimate for full-year earnings over the past 90 days, reflecting improved analyst sentiment [3] - Year-to-date, Ericsson has returned approximately 9.9%, outperforming the Computer and Technology sector average return of -3% [4] Group 2 - Ericsson belongs to the Wireless Equipment industry, which consists of 12 stocks and currently ranks 18 in the Zacks Industry Rank, with an average gain of 3.9% this year [5] - Another stock in the sector, Celestica, has a year-to-date return of 23.5% and is part of the Electronics - Manufacturing Services industry, which has moved +11.2% this year [4][6] - Both Ericsson and Celestica are showing solid performance, making them noteworthy for investors interested in Computer and Technology stocks [6]

Core Viewpoint - Celestica Inc. and Plexus Corp are prominent players in the electronics manufacturing services (EMS) industry, each with distinct strengths and challenges in their respective market segments [1][2][3]. Group 1: Company Overview - Celestica is one of the largest EMS companies globally, providing a wide range of manufacturing and supply-chain solutions to various industries [1]. - Plexus specializes in electronic contract manufacturing services across multiple sectors, including Healthcare, Industrial, and Aerospace/Defense [2]. Group 2: Competitive Dynamics - Plexus is experiencing growth in the Healthcare/Life Sciences and Aerospace/Defense sectors, driven by strong customer demand and program ramps [4]. - Celestica is capitalizing on the growing AI demand, with products like the SC6100 storage controller and DS4100 switch gaining traction in enterprise applications [7]. Group 3: Financial Metrics - Plexus has a debt-to-capital ratio of 0.13, significantly lower than the industry average of 0.46, indicating strong financial health [5]. - Celestica's debt-to-capital ratio stands at 0.37, also below the industry average, with a current ratio of 1.43, reflecting good liquidity [9]. Group 4: Growth Estimates - The Zacks Consensus Estimate projects Celestica's 2025 sales and EPS to grow by 13.15% and 30.15%, respectively [12]. - For Plexus, the 2025 sales growth is estimated at 2.64%, with EPS growth at 20.98%, although the EPS estimate for 2026 is trending downward [12]. Group 5: Price Performance - Over the past year, Celestica's stock has increased by 112.4%, outperforming the industry growth of 46.7%, while Plexus has gained 15.2% [14]. - Plexus shares trade at a forward P/E ratio of 17.98, lower than Celestica's 20.69, making Plexus appear more attractive from a valuation perspective [16]. Group 6: Investment Outlook - Celestica's focus on AI and cloud technologies has led to impressive revenue and EBITDA growth, positioning it as a more favorable investment option compared to Plexus, which faces challenges [18].

Group 1 - The article emphasizes the importance of delivering alpha-generating investment ideas through a structured and evidence-based approach [1] - The investment strategy involves a generalist approach, analyzing and investing in various sectors with perceived alpha potential compared to the S&P 500 [1] - The typical holding period for investments ranges from a few quarters to multiple years, indicating a long-term investment perspective [1] Group 2 - The author has a beneficial long position in CLS shares, indicating confidence in the stock's performance [2] - The article expresses the author's personal opinions and is not influenced by any compensation from companies mentioned [2] - There is no business relationship with any company whose stock is discussed, ensuring an independent viewpoint [2]

Investment Rating - The report assigns a "Buy" rating for the company with a target price of $133.02 based on a 20X PE for 2026 [4]. Core Views - The company is a leading manufacturer of ASIC servers and Ethernet switches, benefiting from the growth in AI inference demand, particularly from major cloud service providers in North America [2][3]. - The company is expected to recover from a short-term decline in server revenue due to Google's TPU product transition, with anticipated growth resuming in the second half of 2025 [2]. - The company is actively expanding its customer base for ASIC servers, having become a supplier for Meta and secured a project with a leading commercial AI company [2][3]. Summary by Sections 1. Deep Layout in ASIC Servers and Ethernet Switches - The importance of inference computing power is increasing, and the ASIC industry chain is expected to benefit from this trend [14]. - The company is positioned to benefit from the volume growth of ASIC servers and the expansion of its customer base, particularly with Google and Meta [27][31]. - The Ethernet switch business is poised to grow due to the trend of AI Ethernet networking, with increased demand for high-speed switches [32]. 2. Transition from EMS to ODM - The company is shifting from an EMS model to an ODM model, which is expected to enhance customer binding and improve profitability [47]. - The revenue from the hardware platform solutions (ODM) is projected to grow significantly, contributing to overall revenue growth [50][52]. - The company's gross margin and operating profit margin have been steadily increasing due to the growth of its ODM business [52]. 3. ASIC Industry and Company Alpha - The company is well-positioned in the ASIC server and Ethernet ODM switch market, benefiting from industry trends and new customer acquisitions [3][4]. - The company’s net profit is forecasted to grow significantly over the next few years, with expected profits of $593 million, $765 million, and $871 million for 2025, 2026, and 2027 respectively [4][8]. - The company is expected to gain market share as it expands its customer base and increases the complexity of its products [31]. 4. Profit Forecast and Investment Recommendations - The company’s revenue is projected to grow from $7.96 billion in 2023 to $15.89 billion in 2027, with a compound annual growth rate (CAGR) of approximately 14.1% [8]. - The EBITDA is expected to increase from $467 million in 2023 to $1.296 billion in 2027, reflecting strong operational performance [8].

Group 1 - Celestica Inc. is a Toronto-based electronics manufacturer that has positioned itself as a significant player in current technology and industrial trends [1] - The company is recognized as an "AWS Certified AI Practitioner Early Adopter," indicating its involvement in advanced AI technologies [1] - Celestica's expertise includes the buildout, deployment, and maintenance of AI tools and applications, showcasing its deep knowledge in generative AI systems [1] Group 2 - The article highlights the importance of machine learning algorithms, model training, and deployment in Celestica's operations [1] - The company is actively pursuing advanced AWS machine learning certifications to enhance its expertise in AI and machine learning [1] - Celestica's strategic positioning in the technology sector suggests potential growth opportunities as it aligns with industry trends [1]

Group 1 - The stock of Celestica (CLS) has decreased by approximately 9%, despite the strengthening of its fundamentals [1] - The current earnings season for big tech companies is ongoing, which may impact market sentiment towards Celestica [1] Group 2 - The article reflects a bullish thesis on Celestica, indicating a potential misalignment between stock performance and company fundamentals [1]

Core Insights - Pythia Research specializes in identifying multi-bagger stocks, particularly within the technology sector, utilizing a blend of financial analysis, behavioral finance, psychology, social sciences, and alternative metrics to evaluate companies with high conviction and asymmetric risk-reward potential [1] Group 1: Investment Strategy - The company employs a multidisciplinary strategy to uncover breakout opportunities before they gain mainstream attention, focusing on market sentiment and emerging trends [1] - Pythia Research emphasizes the importance of understanding investor behavior, including biases such as herd mentality and recency bias, which can create persistent inefficiencies in the market [1] - The firm analyzes psychological noise rather than avoiding it, assessing whether market volatility is driven by emotion or fundamentals [1] Group 2: Opportunity Identification - The research process includes identifying disconnects where belief lags behind reality, particularly in companies that are redefining their categories or have unconventional growth paths [1] - Key signals for potential exponential growth include sudden shifts in narrative, early social traction, founder-driven vision, and underappreciated momentum in user adoption [1] - Pythia Research focuses on conviction plays with a favorable risk/reward profile, aiming for limited downside and explosive upside [1]

Investment Rating - The report maintains an "Overweight" (OW) rating for the covered companies, indicating an expectation of outperforming the average total return of the stocks in the research analyst's coverage universe [29][31][33]. Core Insights - The report highlights robust capital expenditure (capex) growth among major US Cloud Service Providers (CSPs) such as Meta, Microsoft, and Google, with a combined year-over-year growth of 60% [1]. - The positive outlook for capex investments is supported by raised full-year guidance from Meta and reiterated forecasts from Microsoft and Google, suggesting continued strong investment momentum throughout the year [1][3]. - Despite concerns regarding a slowdown in AI investments and tariff impacts, the report suggests limited near-term effects on capex trajectories for the CSPs [1]. Summary by Company Meta - Meta's capex increased by $7 billion year-over-year for the second consecutive quarter, with a 104% rise year-over-year in Q1 2025, reaching $13.7 billion [3]. - The full-year capex outlook for 2025 has been raised to $64-$72 billion, reflecting a year-over-year growth of 73%, driven by AI investments and core business support [3]. Microsoft - Microsoft reported a capex of $21.4 billion for Q3 2025, marking a 53% increase year-over-year, despite a 5% quarter-over-quarter decline [3]. - The company maintains a double-digit growth outlook for fiscal 2H25, with expected year-over-year growth of over 10% for Q4 2025 [3]. Google - Google's capex for Q1 2025 rose by 20% quarter-over-quarter and 43% year-over-year, totaling $17.2 billion, primarily due to infrastructure investments [3]. - The full-year capex outlook for 2025 is reiterated at $75 billion, indicating a year-over-year growth of over 40% [3].