CLS More Than Doubles in 6 Months Compared With Industry: Time to Buy?

Core Insights - Celestica Inc. (CLS) has experienced a stock price increase of over 147.3% in the past six months, significantly outperforming the industry average of 67.4% [1] - The company is positioned as a key player in the AI revolution, leveraging its manufacturing experience to provide advanced data storage and networking solutions [2] Growth Drivers - The demand for AI/ML compute and networking products from hyperscale customers has been a primary growth driver for Celestica, particularly through its high-performance 800G network switches and scalable storage solutions [3][4] - The integration of next-generation networking products with silicon photonics packaging aims to optimize supply chain solutions and enhance data center capabilities [4][6] Capacity Expansion - Celestica is expanding its production capacity with over 100,000 square feet in Thailand and an additional 80,000 square feet in Malaysia to meet the growing demand for AI-enabled products [7] Financial Performance - In Q4 2024, Celestica reported adjusted earnings of $1.11 per share on revenues of$2.55 billion, marking a 19% year-over-year increase [8] - For 2024, revenues are projected to grow by 21% year-over-year to $9.65 billion, with adjusted earnings rising 58$3.88 per share [8] Future Outlook - The company anticipates 2025 revenues to reach approximately $10.7 billion, an increase from the previous estimate of$10.4 billion, with adjusted earnings expected to be $4.75 per share [9] - Earnings estimates for 2025 have increased by 42.2$3.65, indicating strong growth potential [10] Industry Position - Celestica's investments in silicon photonics are expected to open new applications across various industries, including automotive, telecommunications, and aerospace [14] - The company has a trailing four-quarter average earnings surprise of 10.3% and holds a Zacks Rank 1 (Strong Buy), suggesting strong potential for stock price appreciation [15]