The stock markets in North America delivered hefty gains last year. Information technology was the biggest winner among 11 primary sectors, both in Canada and the United States. However, jubilation turned into shock when Donald Trump assumed office as the 47th President of the United States on January 20, 2025.
One of Trump’s executive orders on Day One was to prepare for even more tariffs, continuing from his first term. His sweeping duties on U.S. imports and changing stance have since heightened market volatility. Will the big winners in 2024 rise, despite the tariff chaos?
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Winning investment
Celestica (TSX:CLS) solidified its position as Canada’s artificial intelligence king and counterpart of NVIDIA on Wall Street. The TSX stock’s overall return in 2024 was 242%-plus following a phenomenal growth pace. Third-party analysts maintain a bullish sentiment, and because of market trends, the share price could triple by 2026.
Continued confidence
The continued confidence in Celestica’s future is incontestable, given the impressive financial results in 2024. This $15.3 billion company is a leader in design, manufacturing, hardware platforms, and supply chain solutions. It partners with or delivers solutions to clients across multiple markets.
Two core segments, Connectivity & Cloud Solutions (CCS) and Advanced Technology Solutions (ATS), contribute to revenues. CCS caters to Communications and Enterprise end markets, while ATS focuses on Aerospace & Defense (A&D), Industrial, HealthTech, and Capital Equipment businesses.
Celestica’s complete lifecycle solutions help clients optimize the supply chain, overcome business challenges, and reduce costs. In the 12 months ending December 31, 2024, revenue (all GAAP figures) rose 21% to US$9.7 billion, while net earnings jumped 75% year-over-year to US$428 million. Free cash flow (FCF) in Q4 2024 climbed 11% to US$95.8 million versus Q4 2023.
Rob Mionis, President and CEO of Celestica, said, “We are pleased with the company’s strong performance in the fourth quarter and solid finish to 2024. Looking towards 2025, we are pleased to raise our full-year outlook, reflecting strengthening demand in our CCS segment.”
Revised guidance
Celestica revised its revenue guidance for 2025 upward, from US$10.4 billion to $10.7 billion. According to Mionis, the current demand environment for data centre hardware is robust. “As such, we believe the positive momentum we are experiencing will continue beyond this year and into 2026,” he added.
From analysts’ perspective, Celestica’s strong, visible growth potential stems from its involvement in AI infrastructure, notably through its custom Application-Specific Integrated Circuits (ASICs) servers and white box switches. ASICs are highly efficient microchips that perform specific functions, not general-purpose processors. The solid relationships with major hyperscalers in this market provide a significant advantage.
For JPMorgan, Celestica is well-positioned to capitalize on the growing demand for AI infrastructure. RBC Capital Markets and BMO Capital Markets see strong business momentum for this winning investment.
Key growth drivers
Celestica has several key drivers for future growth, including businesses with higher margins in the High-Performance Solutions (HPS) portfolio. Note that at $131.08 per share today, the three-year return is 727%-plus. AI, Machine Learning, and continued investments in research and development (R&D) enhance long-term value creation prospects and the possibility of the stock price tripling by 2026.
