In retirement, you may feel the need to start taking cash out and hiding it in your mattress. The urgency of needing that cash on hand can keep you from creating more earnings. Even from conservative investments, never mind a small high earner.
The trick is keeping an exciting investment small enough that a bad year doesn’t start choosing your grocery budget. Artificial intelligence (AI) offers enormous business opportunities. It also attracts prices that assume tomorrow will arrive exactly on schedule. I’d make room for the opportunity, while spending money safely elsewhere.
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Growth has a bill attached
AI needs more than clever software. Data centres need equipment that moves information between computers quickly, along with electricity, cooling, and reliable connections. Suppliers can earn from that building spree even when the winning AI application changes. They still need customers to keep ordering and to pay enough for the equipment.
That’s the connection for Celestica (TSX: CLS), which designs and manufactures technology infrastructure, including networking and computing equipment. It gives a Canadian portfolio exposure to the hardware behind AI. This isn’t a retirement-income holding that sends a regular dividend. Its job would be growing capital that I won’t need for years.
Its October results showed third-quarter revenue rising 83%. For Celestica, that signals a much larger manufacturing workload and customer demand strong enough to support expansion. The shareholder reward depends on keeping a worthwhile share of those sales after paying for parts, people, and facilities.
Follow the cash
Management lifted its sales outlook while reducing its 2026 free-cash-flow outlook from US$600 million to US$460 million. Free cash flow is money left after the company’s defined adjustments and capital spending. Celestica says the reduction reflects working-capital investment for faster growth ahead.
More inventory and money waiting to be collected from customers can tie up cash before additional sales arrive. I’d accept that when orders turn into cash promptly. I’d become less comfortable if spending kept racing ahead while customer demand cooled.
The distinction is especially relevant when buyers are enormous technology companies. A handful of spending decisions can change a supplier’s workload quickly. Celestica’s experience and customer relationships help it compete, but don’t require customers to keep increasing budgets forever.
Set a limit
The recent close was $330.24. The shares fell about 9.2% that day, a brisk reminder that owning equipment suppliers isn’t the same as collecting rent. A lower price improves the entry cost, although it doesn’t settle the value of future profits.
I’d consider an initial allocation of 2% of an otherwise diversified retirement portfolio, rather than making it the centrepiece. Here’s how a simple 40% share-price decline affects different starting positions, assuming everything else stays flat.
| STARTING PORTFOLIO WEIGHT | STOCK DECLINE | EFFECT ON WHOLE PORTFOLIO |
|---|---|---|
| 2% | 40% | 0.8% decline |
| 5% | 40% | 2.0% decline |
| 10% | 40% | 4.0% decline |
Those are loss illustrations, not predictions. The same arithmetic explains why I wouldn’t let a successful position grow unchecked. An investment that began as a side dish can eventually take over the plate.
Bottom line
For someone already drawing retirement income, I’d keep near-term withdrawals in cash or suitable guaranteed investments. That reduces the chance of selling Celestica after a bad earnings reaction. A growth holding needs time precisely because its price can be uncooperative.
Holding it inside a Tax-Free Savings Account (TFSA) can generally shelter Canadian tax on gains, provided there’s contribution room. Losses still reduce the capital available to recover, so the account doesn’t make a concentrated position safer. I’d pair the holding with businesses whose earnings depend on different customers and spending cycles.
I’d consider Celestica a small, patient growth purchase in a diversified Canadian stock portfolio. Customer orders becoming cash would earn my confidence more than another ambitious outlook. With the retirement paycheque funded elsewhere, I could give that business time to grow without asking one technology stock to finance next month’s life.
