Hello Friends!  Thanks so much for stopping by and visiting my blog Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website or on my Podcast!

One of my favorite ways of discovering new stocks is to peruse the Investor's Business Daily 'Weekly' newspaper. Within the paper is what is called the "IBD 50"  These are a list published each week of what the newspaper considers the 'strongest' stocks in the market.  They do this by their own proprietary computer-generated list considering "...earnings, sales, price action and other factors."  In any case, they place these 50 stocks into boxes with small charts and include data such as their P/E, last quarter EPS change, Prior quarter, and last quarter sales.  

Today's selection Celestica (CLS) is a stock that was #1 in the June 24, 2024 edition.  I do not own any shares but might consider a position.  In fact, I haven't really investigated this stock until right now (honestly) and trying to restart both my blog and podcast record, thought it might be worth a visit.

Let's look at a few 'free' websites to get more information on this stock!

For the record, it closed today at $59.48, down $1.99 or (3.24)%.  After hours it is up $.02 or .03%.

What does this company do?

Looking at the Yahoo "Profile", we see that Celestica 

"...provides supply chain solutions in North America, Europe, and Asia. It operates through two segments: Advanced Technology Solutions, and Connectivity & Cloud Solutions. The company offers a range of product manufacturing and related supply chain services, including design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics, asset management, product licensing, and after-market repair and return services. It also provides hardware platform solutions, which includes development of infrastructure platforms, and hardware and software design solutions and services which is used as-is or customized for specific applications; and management of program including design and supply chain, manufacturing, and after-market support, including IT asset disposition and asset management services."

 I am not sure if that clarified much except it does show that the company is in the high-tech electronics solution providing both hardward and software solutions.

What about the last quarter? One of my decisions to buy a stock or not requires me to look at the latest quarter results.  I want to find a company that at the least is growing its revenue, improving its earnings results and hopefully exceeding expectations.  In my own mind, stock price movements are affected by the market itself, like a ship floating in water the stock will of course generally rise or fall as the water level changes.  However, within that 'fleet' of ships, an individual boat (or investment) will rise or fall based on its own underlying financial results.  If we assume that the market is imperfect in pricing equities (we must if we are to consider investing at all), opportunities arise when a company 'surprises' either to the upside or the downside.  With financial results that generally means that 'expectations' are either exceeded and perhaps the stock is underpriced, or the company failed to meet expectations and 'disappointed' as it is said.  Thus the market has improperly priced the equity and downward pressure results often with a subsequent decline in stock price.  I hope you follow.....

Anyhow, looking online at the company website, I found First Quarter 2024 Financial results for the quarter ending March 31, 2024. 

Summarizing briefly, revenue came in at $2.21 billion up from $1.84 billion the year before, and EPS (earnings per share) came in at $.85 compared to $.20 the prior year.  This was a strong result from my own 'amateur' perspective. 

Another great place to find out more about financial results is the Yahoo Finance Analysis page for CLS. 

Here we can see that the average earnings estimate for this year is $3.33 and $3.63 for next year.  The prior year they came in at $2.43/share.  So far so good.

In terms of revenue, the 9 analysts following Celestica estimate tha the current (2024) year will come in at $9.12 billion and next year $9.93 billion, an 8.80% improvement.  The prior year (2023) they managed to have $7.96 billion in sales.

This company is growing both the top line (revenue) and bottom line (earnings).

The next block of figures on that same page is 'Earnings History).  Over the last four quarters the company has managed to exceed earnings expectation.  For the quarter ended 6/30/23, they were estimated to come in at $.47/share.  In fact, they came in at $.55/share, exceeding estimates by $.08 or 17%.  Following quarter a similar pattern:  $.60 expected, came in at $.65, and 8.3% beat.  For quarter ended 12/31/23, they came in at $.76 with expectations of $.68 estimated a beat by 11.80%.  In fact in the lates quarter, they had the biggest beat of the prior 4, in the quarter ended 3/31/24, they came in at $.86 when the estimate was for $.72/sharfe.  This was a beat by 19.40%.

Each beat is like pouring fuel onto a fire.  When you beat it drives stocks higher and of course when you miss, the opposite is true.

If you are 'long' this stock---hoping to see price appreciation, this is exactly what you would like to find.

At least in my own 'amateur' perspective :).

What about the next block of numbers, "EPS Trend" on the samne page.  (This page on Yahoo is rich in formation from my own perspective.)

This section informs us of the optimism or indeed the pessimism of the 9 analysts currently following this stock.  In each column we can detect growing optimism over financial results (and perhaps price appreciation following along?).

Current quarter (June, 2024), estimates were for $.71/share in earnings 90 days ago, this has improved to $.81 in current estimates, similarly for next quarter earnings were estimated at $.73/share 90 days ago, (quarter ending September, 2024) and currently looking at $.82/share.  For the entire 2024 year, estimates were at $2.93/share 90 days ago, currently they are at $3.33/share.  Not surprisingly next year estimates were at $3.24/share 90 days ago and currently analysts are looking for $3.63share today.

The company appears to be 'firing on all cylinders' if I can use that metaphor.  They are producing financial results that exceed estimates and estimates are continuing to be increased.  This should result in a strong stock price performance.

So let's look at the chart.  I like to use StockCharts.com for this and over the years have grown to appreciate 'point & figure' charts.  These were introduced to my Stock Club by the broker Bob Allen, I believe his name was.  At first they seemed a bit confusing, but today I cannot do without them.  Here is the chart on Celestics (CLS).

(I am having a bit of a struggle getting my blog to show the image but the link is above).

In any case it is an extremely strong chart starting in January, 2018 when the stock was trading at $10.50/share, it dipped all the way down to $2.75/share briefly in March, 2020 (don't we all wish we had picked up some shares then!), the started its ascent to $59.48 currently where it closed on 7/11/24.

We have discussed some 'fundamental' information with financial results, and a technical glance by looking at a chart.  Certainly we should consider 'value' in picking a stock.  Some people invest trying to find a 'cheap' stock that might thus appreciate, others may be pure 'momentum' investors looking for a stock that is going 'to the moon' regardless of valuation and financial results.  I always think of 'meme stocks' like Gamestop that climb without apparent regard to underlying financials.

Morningstar.com allows us to see some financial valuation figures.   The latest valuation numbers (simplifying for this amateur), show that in 2023 the company has a trailing P/E of 17.43.  This might seem rich to a value investor who might prefer to invest in a company with a P/E closer to 10.  But this is a rapidly changing company with earnings and revenue growing each quarter.  If you had a large utility producing (an imaginary example) essentially the same revenue each quarter and each year and similarly the same earnings, then a simple P/E (price/earning ratio) might be just fine.

With a dynamic, and changing growth stock, a more useful number is the PEG ratio. 

This ratio gives perspective to the P/E ratio--taking into consideration the estimated 'growth' in results thus comparing the P/E to the Growth Rate (the G in the equation.

 According to the Morningstar.com historic figures, the PEG ratio in the past was as high as 10.02 in 2017, but in 2022 was at 1.62, and 2023 actually at 0.49 meaning for 'valuation' the price is very reasonable considering the robust earnings growth anticipated.

Furthermore, we may wish to look a little further 'under the hood' (by the way I know absolutely nothing about cars so maybe take this entire discussion with several grains of salt!).  Looking at Morningstar Financials on CLS,  we can see that the company has had a robust record of improving operating cash flow, and "free cash flow" has improved steadily from $174.6 million in 2021 to $304 million in 2023 and $356.1 million in the trailing twelve months (TTM).

It is indeed nice to be blogging once again.  I hope to continue to do so. 

In conclusion I really like this stock.  And no I do not own any shares not in my personal account and not in my stock club.  But I am indeed tempted to start a position if the opportunity arises and I may share this one with my club next month.

This company is technically doing very well with steadily improving stock price.  Valuation isn't bad and fundamentally they have grown their results this year compared to last and looking forward are estimated to do so in the future.  The last four quarters they have exceeded expectations.

Will the stock price increase?  Or decrease?  I do not know.  If I did I would need to be clairvoyant.  But if we can build portfolios with these characteristics I do believe that positive results are positive.  But always limit your losses if things don't work out.

In any case, do I need to remind you that I am an amateur investor.  I am really truly that.  I love stocks and If anything I have written has some value for you I am very appreciative.  Always remember to consult with your professional investment advisers prior to making any investment decilsions based on this website or on my podcasts.

You also can look back on prior posts here and see how they worked out.

Yours in investing,

Bob