Q: CLS: heading down - still very high P.E., very high price to C.F. etc. Selling due in part to profit taking for year-end? Lofty price going into 2026 of $600.00 per share? Buy for TFSA 100 shares? Risk vs potential as I do not follow this one and know very little about tech.
5i Research Answer:
It is impossible to know the exact reason for any decline (in the absence of news) but the AI-related sector has seen a correction, and at year-end trading can always be unusual. There are not great Canadian choices in the sector but CLS remains one of the better ones. P/E is 45X but it continues to execute well and is growing fast. Most of its customers are increasing spending budgets. The average target price is $517. We think it still has good potential, but the market does need to co-operate. It could decline 25% or even more in a bad market, but also could easily rise that amount or more in a good market. We think it is buyable today for investors seeking tech exposure and for those that have at least a 3+ year timeframe.