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Celestica Inc. (CLS)

Shares of this electronic manufacturer took a hit after missing earnings by three cents. However, revenue was higher than expected, and analysts are forecasting double-digit growth for next year. And the company has been taking advantage of the discounted stock price, by buying back shares.

Celestica Inc. (CLS)
From The Buyback Letter

Celestica Inc. (CLS) is one of the main companies in the electronic manufacturing services (EMS) industry that provides a broad range of parts to original equipment manufacturers. Many of Celestica’s products are found as parts of everyday goods, such as smart phones, wireless networking, printers, medical products and many others.

Celestica management has begun to turn away from the consumer market and focus on becoming more of a target niche provider. Some 30% of Celestica’s revenue mix comes from industrial companies, which management hopes to increase to 40%-50% in the next few years. A target focus is on the growing aerospace and defense markets.

Some analysts consider it a top small-cap stock ($2 billion or less in market cap, with the company often in the pioneering stage of its life cycle).

The company recently got several kudos. For the second year in a row, Celestica was named to the 2016 Global 100 Most Sustainable Corporations in the World (Global 100) Index by Corporate Knights. These are the top overall sustainability performers in their respective industrial sectors, selected from a base of 4,608 listed companies. The Global 100 is determined using quantitative sustainability indicators in areas including relative energy and water consumption, greenhouse gas emissions, waste production and board diversity. And in September it received the 2015 EMS Partner of the Year award from Cisco®.

Q4 results showed a net income of $12.1 million, after reporting a loss in the same period a year earlier. EPS was 27 cents, which missed Wall Street expectations of 30 cents. However revenue of $1.51 billion in the period topped Street forecasts of $1.43 billion. For the year, the company reported profit of $66.9 million (42 cents per share), with revenue of $5.64 billion.

Management has reduced shares outstanding by 21.11% in the last 12 months.

David R. Fried, The Buyback Letter, www.buybackletter.com, 888-289-2225, February 15, 2016