Is Celestica Inc. (CLS) A Good Stock to Buy Right Now?

A bullish thesis on Celestica appeared on r/ValueInvesting last week. The poster, Wooden_Fondant_703, sees the company as an undervalued AI infrastructure play. CLS closed at $386.50 on June 8, with a trailing P/E of 45.06 and a forward multiple of 36.76, according to Yahoo Finance data cited in the post.

The argument centers on Celestica's design and manufacturing services for hyperscale data centers. The Reddit user points to double-digit revenue growth and a clean balance sheet. The stock valuation looks low compared to peers like NVIDIA, he argues. The simple read is that Celestica benefits from the same AI spending wave that lifted other hardware names. Its stock has lagged, creating an entry point.

That view has merit. Celestica's manufacturing services are embedded in the supply chains of major cloud providers. The company has posted strong revenue growth in recent quarters, and the AI infrastructure cycle shows no near-term sign of fading. The forward P/E of 36.76 already prices in a lot of that growth. Compare that to the broader technology sector, where the median forward multiple sits around 25. Celestica trades at a premium that demands continued acceleration. A fuller discussion of the valuation appears in Celestica AI Infrastructure Valuation and Growth Potential.

The Reddit user argues that Celestica's role in networking and computing hardware creates a narrow moat. The company's design expertise helps clients bring products to market faster. That stickiness supports recurring revenue. As earnings grow, the forward multiple could compress, making the stock cheaper on a growth-adjusted basis. The user sees the current price as an entry point before that catch-up happens.

The user expects earnings to grow at a 20% compound rate over the next few years. That rate makes the P/E-to-growth ratio about 1.8 on a forward basis. For some investors, that PEG is reasonable. For others, it leaves no margin of safety.

AI infrastructure spending is the primary catalyst. Hyperscalers like Amazon and Microsoft are building out data center capacity at record rates. Google is also investing heavily. Celestica supplies the networking equipment that connects the computing nodes. Any slowdown in that capex would hit the story hard. For now, capital expenditure guidance from the major cloud providers remains strong.

Celestica differentiates through its design-for-manufacturing expertise. The company works with clients early in the product cycle, helping to design boards and systems that are efficient to build. That engineering service creates a closer relationship with customers. It also makes the manufacturing contract harder to switch than a pure build-to-print job.

Risks are real. Customer concentration is one. A handful of large buyers account for a significant portion of revenue. If one pulls back on capex or shifts to an internal solution, the growth story cracks. Margins are another concern. Celestica operates in a competitive space. Pricing pressure from customers can squeeze profitability. The bull case assumes margins will expand. Margin expansion is not guaranteed.

Celestica faces stiff competition from larger players like Flex and Foxconn. Those rivals have scale advantages in procurement and manufacturing. Pricing pressure is constant. The bull case relies on Celestica's engineering value-add to command higher margins. That strategy has worked in recent quarters. Turnaround times in manufacturing mean margin swings are common. The industry's cyclical nature adds risk.

Tariffs on imported electronics components could raise costs. Celestica sources from multiple regions. A trade disruption would still hit margins.

Flex trades at a forward P/E of 15. Jabil trades at 13. Celestica's premium reflects its higher growth rate. The question is whether that growth can sustain the multiple.

AlphaScala's proprietary score for CLS sits at 61 out of 100, labeled Moderate. The company is scheduled to report second-quarter results in late July. The CLS stock page provides the underlying metrics.