Celestica: Fundamentally Attractive But Priced Dearly (Archive)
Strong hyperscaler-driven growth meets rich valuations and cautious technicals for new buyers.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Celestica's fundamental growth is strong and above expectations. This is driven by a strong outlook from hyperscaler customers.
- A revenue mix shift toward hyperscaler customers would be accretive for EBIT margins going forward.
- At a 51% premium to its longer term 1-yr fwd P/E, I think valuations are high, with little margin of safety, given product mix volatility and high customer concentration.
- Relative technicals vs. the S&P500 signal caution near the 12-monthly (yearly) resistance level.
- As lead times normalize from their currently still elevated levels, there is scope for further improvement in inventory turnover.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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