Celestica (TSX:CLS) stock has been one of the most surprising and impressive growth stories in the Canadian market over the past year. With a 265% gain in just a year, the company has transformed from an under-the-radar tech manufacturer into a market darling riding the wave of artificial intelligence (AI), cloud computing, and next-gen hardware. But now that the stock has vaulted from $55 to nearly $260, investors are asking the obvious question: Is it still a buy?
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Let’s look at the numbers
On the surface, Celestica’s second-quarter numbers make a compelling case that growth is far from over. Revenue came in at $2.9 billion, up 21% year over year and well above expectations. Adjusted earnings per share (EPS) jumped 54% to $1.39, and the adjusted operating margin hit a record 7.4%. For a Canadian stock known for thin manufacturing margins, that kind of expansion is a major signal that Celestica is building leverage into its business. Management wasn’t shy about it either, bumping up full-year guidance for both revenue and EPS and projecting $11.6 billion in sales and $5.50 in adjusted EPS for 2025.
The Connectivity & Cloud Solutions (CCS) segment was the clear engine behind Q2’s breakout. That business grew 28% year over year and now accounts for over two-thirds of revenue. Within CCS, Hardware Platform Solutions revenue exploded 82%, thanks to growing demand from hyperscalers and AI-focused infrastructure customers. While not a pure-play AI stock, Celestica’s ability to serve the backend of the cloud and data centre buildout has quietly positioned it as one of the biggest beneficiaries of that trend.
Even the slower-growth Advanced Technology Solutions segment, which includes aerospace and industrials, managed to grow 7% in the quarter. Segment margins in both divisions expanded meaningfully, reflecting better cost control and improved product mix. In short, this isn’t just a revenue growth story anymore, but also a margin expansion story.
So what’s the problem?
Valuation is where the conversation gets tougher. Celestica now trades at more than 42 times trailing earnings and over 35 times forward earnings. For a contract manufacturer, even one with increasing exposure to high-margin tech, that’s a lofty multiple. Price-to-sales is over 2.1, and price-to-book has stretched above 12.7. At these levels, investors are betting on multiple years of double-digit growth not just to continue, but to accelerate.
That’s not out of the question. The Canadian stock forecasts third-quarter revenue between $2.9 billion and $3.1 billion and adjusted EPS of $1.37 to $1.53. Guidance for full-year free cash flow has also been raised to $400 million. These are not numbers that suggest a slowdown is imminent. And the broader trends of AI, cloud hardware, defence, and industrial automation are still in the early innings.
Still, this is a Canadian stock that has priced in a lot of perfection. Any stumble, whether in demand, execution, or margins, could trigger a pullback. Already, the Canadian stock dipped from its July high above $300 and is down about 15% in recent weeks. That doesn’t mean the bull run is over, but it does reflect a market trying to digest just how much good news is already reflected in the share price.
Bottom line
The lack of a dividend and the high beta of 1.7 mean this isn’t the kind of Canadian stock for conservative investors or those seeking steady income. But for those with a longer time horizon and a tolerance for volatility, Celestica still has room to grow. The business is clearly firing on all cylinders, and its ability to scale into the AI and cloud boom makes it one of the most exciting industrial tech names in North America.
After a staggering run, Celestica may need time to cool off. But betting against this company’s execution has been a losing strategy for over a year. The growth story is still unfolding, and for investors looking to ride the next phase of the digital buildout, Celestica deserves a close look.
