One Canadian growth stock I haven’t talked about much, but probably should have, is Celestica (TSX:CLS). This cloud-focused supply chain management company has delivered incredible results (shown below), with CLS stock surging more than 50% on a year-to-date basis alone.
Any company that’s running at a triple-digit annualized rate is one worth diving into. So, let’s do just that!
What’s the story behind Celestica’s growth?
Celestica’s status as a top Canadian-based multinational provider of supply chain solutions for some of the world’s leading brands is clearly not lost on investors. The company operates in more than 40 markets, with its core solutions being used in a diverse range of industries from health care to industrial, defence, communications, and energy companies.
This broad diversification and a steadily growing customer base have provided solid revenue and earnings growth for the company, which continues to expand into new markets. With global scale and expertise in its core markets, and a suite of integrated solutions for a customer base that often requires custom solutions, this is a company I think the market has certainly caught onto.
With a strong pipeline of innovative new solutions and impressive operational flexibility (driven by a capital-light business model), there’s good reason why Celestica is trading at the valuation it is.
Is Celestica still worth buying here?
Impressively, even after Celestica’s astronomical 50% surge over the past year, this stock is still one that’s trading at less than 30 times forward earnings. That means that if the company’s growth rate continues and an investor holds for a period of, say, two years, this is a stock that should have a multiple in line with the market in a couple year’s time. That’s the sort of bet many investors may feel comfortable making.
Now, it’s true that various macro concerns have hit this stock this year, so there’s some geopolitical risk to be factored in. But holding all else equal and assuming the ongoing tariff concerns don’t pan out in a worst-case scenario, there’s a lot to like about how Celestica is positioned here.
