$CLS (+1,01 %) is a Canadian-based electronic manufacturing company that is highly exposed to the growing AI industry and its hyperscalers. According to Seeking Alpha, "The company offers its products and services to equipment manufacturers, cloud-based, and other service providers, including hyperscalers, as well as companies in aerospace and defense, industrial, HealthTech, capital equipment, and communication and enterprise markets."

$CLS (+1,01 %) has been a top performer in both 2022 and 2023, delivering exceptional returns. The stock price skyrocketed from $10 in January 2022 to a remarkable $100 by the end of 2023, representing a 1,000% gain in just two years. In 2023 alone, it achieved approximately 255% growth. Currently, the stock is trading close to its all-time high. So, why consider it now?

I've had $CLS (+1,01 %) in my portfolio since October 2023 and added more shares in August 2024. Its momentum remains strong, with excellent performance metrics. The company’s EPS is expected to continue growing in the low double digits, between 15% and 20%, while revenue growth is projected at 10% to 15%. For me, the most compelling factor at this point is the current valuation: Eventhough $CLS (+1,01 %) is an AI play, profitable, with high growth and a consolidated business, it still trades at a 26x P/E for 2024 and a forecasted 23x P/E for 2025. These multiples are aligned with the sector average, but Celestica is growing at a faster pace and maintains a solid financial position, and is strictly linked to AI hyperscalers.

Risks to Consider

The primary risk for $CLS (+1,01 %) lies in its client concentration. Its top 10 clients account for approximately 65% of its revenue, meaning any major decisions by these clients could significantly impact the company’s income. However, Celestica has established long-term relationships with top-tier clients, and the rapid expansion of the AI market offers a promising growth outlook. While the business might be cyclical, the current AI investment cycle is likely to last for several years, and we are still in the early stages of this trend.

It is clearly trading at a higher multiples of its average (which would be arroun 15 P/E), but we are talking about a different moment of growth for the company and the market they're in, so I belive it is justified.

My Position

I am not adding more $CLS (+1,01 %) shares to my portfolio at this point, as it already represents 5.5% of my holdings and is my fifth-largest position. However, I still see potential for further appreciation and have no plans to sell in the near future. I still expect good returns and that's why I add it to my NOT real portfolio F$F Tips.

**Disclaimer**: This is not financial advice. Please conduct your own research before making any investment decisions.