While Nvidia (NASDAQ:NVDA) might be taking up all the headlines, companies associated with the hot stock have also been soaring high. One of these is Celestica (TSX:CLS), with shares climbing 220% in the last year alone!
Quite soon, we could be entering a bull market, making it a good time to pick up Celestica stock. Before we do, however, here are some points to consider. And here’s why you’re going to want to buy this stock in bulk.
Are we in a bull market?
First off, are we even in a bull market? A bull market isn’t anything official. A bull market is a period of sustained growth in financial markets. This is when assets or stocks are rising, and investors are optimistic. I’m afraid this doesn’t quite cover what we’re seeing right now.
A price would need to increase 20% or more from a low point, though, again, this isn’t a hard and fast rule. There would also need to be more investor confidence in buying. While we’re seeing some of that, it’s again nothing certain.
So, with that in mind, the TSX today doesn’t exactly apply. While there has been more than 20% growth since its lowest point, there doesn’t seem to be as much optimism here on the market as there is across the border. Yet this could certainly change in the near future should a strong Canadian economy return.
Why Celestica stock is one to consider
Beyond recent performance, Celestica stock has a lot going for it. The company is an electronics manufacturing company, similar to Nvidia stock. However, it holds a far more diverse range of programs and is more about testing rather than creating.
So, what’s been going on recently with Celestica stock that investors should be interested in? It comes down to earnings. During the fourth quarter, Celestica stock reported revenue of US$2.14 billion, which was a 5% increase from the year before. Its earnings per share (EPS) hit US$0.76, a 36% increase compared to the same time in 2022. Its operating margin also increased to 6%, with its different segments performing well.
Overall, it was a strong quarter — one that analysts believe demonstrates that there is even more growth to come, especially with Nvidia stock doing so well.
What’s with Nvidia?
Nvidia stock creates graphics processing units (GPU). If you operate something digital, it uses these GPUs. But before they can go on the market, companies such as Celestica stock need to test them. Hence the huge interest in the stock as of late.
But it’s not the only thing it does. There are multiple electric manufacturing components that the stock tests out. And this is another reason why the company is of interest. Even should Nvidia stock drop, Celestica stock should continue to do well. This is why analysts believe it could be undervalued.
Strong buy
Celestica stock is seen as a strong buy from analysts these days. In fact, they continue to increase their consensus price targets for the tech stock, especially after strong earnings after strong earnings.
That future earnings potential comes from a strong future for both the stock and the sector. Revenue growth has remained stable, and the company believes this will continue throughout 2024. Furthermore, there are ongoing opportunities in both aerospace and defence as well as specialty technologies.
Furthermore, the company has been improving profitability, making strategic investments, and creating value for shareholders. As for the sector, technological advancements such as artificial intelligence (AI) will only be a benefit to the tech stock. That new focus will need to be tested, making Celestica stock a huge benefactor.
Bottom line
While there is competition, Celestica stock remains a top choice as we see more focus on these types of testing tech stocks. So, if you’re looking for growth, I wouldn’t say that even 220% is the end of the story of Celestica stock. We could see this happen again, especially in a bull market.
