3 Reasons Why Celestica Stock Is Screaming Buy Now

celestica (TSX:CL) may not be a household name, but it is quickly becoming one of the most attractive opportunities for stock investors in Canada. CLS shares, which are up 278% in the previous three years, are up 205% so far in 2024 and are currently trading at $118.31 per share. market value $13.7 billion. If you don’t already know, they are a Toronto-based firm that primarily provides design, manufacturing and supply chain solutions for technology and industrial companies around the world. It serves a wide range of businesses across industries including aviation, healthcare, telecommunications and renewable energy.

If you’re an investor looking for an impressive, growth-oriented investment option with solid fundamentals, Celestica stock may be worth your attention. In this article I will cover three big issues basis Here are the reasons why Celestica is a great addition to your portfolio right now.

High demand for services

The first reason why Celestica shares stand out as a scream buy right now is its ability to maintain a strong financial performance despite the challenging macroeconomic environment, mainly due to strong demand for its services. And this ability is clearly reflected in its recently released third quarter financial report.

In the three months ending September 2024, the company not only exceeded its own targets but also recorded exceptional growth across key business segments. For example, Celestica’s revenue rose 22% year over year to $2.5 billion last quarter, topping its guidance range and beating analysts’ expectations of $2.4 billion.

It’s important to note that Celestica’s success last quarter was largely driven by its Connectivity and Cloud Solutions (CCS) segment, which posted an impressive 42% year-on-year increase in revenue. This strong performance in the CCS segment underscores the growing demand for Celestica’s cloud and communications infrastructure products; These products are vital as more businesses and services migrate to the cloud.

Strong profitability

In the latest quarter, Celestica’s adjusted earnings rose an impressive 60% year over year to $1.04 per share; This easily beat the forecast range of $0.86 to $0.96 and Street analysts’ estimate of $0.93 per share.

Similarly, Celestica’s adjusted net profit margin increased to 5% in the September 2024 quarter from 3.8% in the same quarter a year ago. Such solid earnings growth and margin expansion underscore not only the Canadian manufacturing company’s strong operational efficiency but also its ability to deliver increasing returns to shareholders.

Focus on long-term growth initiatives

Beyond revenue and profit growth, Celestica’s adjusted free cash flow also increased significantly, reaching US$74.5 million in the latest quarter, compared to US$34.1 million last year. Strong cash flow gives Celestica greater flexibility to reinvest in growth initiatives, pursue strategic acquisitions and return capital to shareholders through buybacks. In fact, the company repurchased 2.2 million shares in the third quarter alone.

Recently, Celestica announced a strategic partnership with Groq, a California-based innovative company in the field of artificial intelligence (AI). Groq is currently known for developing a custom language processing unit that accelerates AI inference. Following this partnership, Celestica will support Groq in the production of AI and machine learning servers, with production expected to begin in early 2025. term growth potential.