Celestica Inc. (CLS): A Bull Case Theory

We came across a bullish thesis on Celestica Inc. on R. Dennis’s Substack by OppCost. In this article, we will summarize the bulls’ thesis on CLS. Celestica Inc.'s share was trading at $333.17 as of January 27th. CLS’s trailing and forward P/E were 54.17 and 40.32 respectively according to Yahoo Finance.

Celestica Inc., together with its subsidiaries, provides supply chain solutions in Asia, North America, and internationally. CLS presents a compelling investment opportunity through the strategic sale of deep out-of-the-money put options, specifically the January 16, 2026, $190 strike, recently transacted in 2,800-contract institutional blocks. Trading near $304, Celestica has transformed from a low-margin Electronics Manufacturing Services provider into a high-margin Connectivity & Cloud Solutions partner, driven by Hardware Platform Solutions (HPS) for hyperscale and AI data centers.

This structural pivot has expanded margins to 7.6% and established sticky, high-value customer relationships with Meta, Microsoft, Amazon, and Google. The put strategy effectively creates a limit order to acquire a high-growth company at a significant discount while generating immediate premium income, enhanced by margin efficiency under portfolio margin rules.

The AI Capex supercycle underpins durable revenue visibility, as hyperscalers collectively plan over $400 billion in infrastructure spending through 2026–2027. Celestica’s products—networking switches and ultra-dense storage solutions—are integral to the operation of these AI data centers, and the company’s early engagement in open-hardware design ensures multi-year production contracts and revenue stability. Technical analysis reinforces the $190 strike as a strong support, well below the 200-day moving average, with elevated implied volatility providing further premium advantage.

Celestica’s fortress-like balance sheet, free cash flow of $425 million, low debt-to-equity ratio of 0.37, and NCIB share repurchase program add additional safety. Stress tests show that a drop to $190 would require catastrophic revenue collapse, margin compression, or extreme multiple contraction, all statistically unlikely. Overall, selling the $190 puts offers asymmetric risk-reward: a high-probability income-generating strategy while positioning for ownership of a structurally transformed, high-growth AI infrastructure enabler at a deep-value price, aligning smart-money conviction with disciplined value investing principles.

Previously, we covered a bullish thesis on Celestica Inc. (CLS) by OrangeEveryday in March 2025, which highlighted the company’s transformation into a high-value electronic manufacturing and design provider, strong client relationships, and resilient revenue growth despite customer concentration risks. CLS’s stock has appreciated by approximately 271.92% since our coverage. OrangeEveryday shares a similar perspective but emphasizes structural technology-driven demand and margin protections.

Celestica Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held CLS at the end of the third quarter which was 63 in the previous quarter. While we acknowledge the risk and potential of CLS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CLS and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.