Q: I'm interested in initiating a position in CLS. What are your thoughts are the current evaluation? What would be the case for initiating a position today vs. potential detractors?
5i Research Answer:
The buy case is strong earnings growth, improving margins, a good balance sheet, low valuation and expected long term growth of AI and other business sectors, in addition to possible lower interest rates ahead. The negatives are a possible recession, trade war uncertainty, a peak in data centre business, lower margins on some business lines and deceleration of growth (it has been very strong). At 18X earnings we would be fairly comfortable buying, assuming an investor has an appropriate timeframe to hold.