Just opened a long position on CLS (why I'm bullish on Celestica Inc.)

Look, I know I said I wouldn’t start my $25K trading challenge (where I attempt to outperform the S&P 500) until after my trip to Taiwan.

I promised myself I’d wait.

But then DeepSeek happened, the internet lost its mind, and the market reacted like my drunk uncle at Thanksgiving — swinging wildly in every direction.

Chip leaders like NVIDA (NVDA) and Broadcom (AVGO) took massive hits, and I saw an opportunity I couldn’t pass up.

Translation? Time to go shopping for oversold stocks.

One of the trades I took was a long position on Celestica (CLS) — one of my favorite large-cap stocks in the Information Technology sector.

Let’s talk about why I took this trade.

What does Celestica Inc. do? #

(Besides make me money)

At its core, Celestica is a hardware platform and supply chain solutions provider.

They are the ones who:

• Design and build the actual hardware that helps make all the fancy AI and cloud computing possible
• Handle the complex supply chain management that keeps tech giants running
• Create everything from routers and switches to servers and storage solutions
• Manufacture specialized electronic components that go into products you potentially use daily

Celestica operates in two key segments:

1. Advanced Technology Solutions (ATS) — Serving aerospace, defense, industrial, energy, and health-tech sectors.
2. Connectivity & Cloud Solutions (CCS) — Providing infrastructure for data centers, enterprise networking, and edge computing.

Essentially, they are the behind-the-scenes muscle that keeps high-tech industries running smoothly.

CLS has outperformed the S&P 500 by ~300% over the past 12 months #

Celestica has been destroying the broader market.

Over the past trailing twelve months (TTM), it’s outperformed the S&P 500 by nearly 300%, placing it in the top 1% of stocks by relative performance.

Then, the DeepSeek announcement happened, and suddenly, investors started questioning the future of AI infrastructure:

• If state-of-the-art Large Language Models (LLMs) can be trained and deployed more efficiently, will GPU chips still be in high demand?
• If fewer chips are being used, will the need for data centers decline?
• And if that happens…what does that mean for companies that provide hardware and cooling solutions for these data centers?

All of these are valid concerns — but it was my belief that the market reaction following the DeepSeek announcement was overblown.

Celestica has incredible earnings and revenue, consistently growing and beating projections #

Since April 2023, CLS has been on steep upward trajectory.

Let’s break it down.

First, Celestica has beaten earnings projections quarter after quarter:

Revenue is telling the same story, with steady upward momentum:

And in terms of profit margins, both gross profit margins and net profit margins are steadily increasing, implying that Celestica is becoming more efficient and more profitable over time:

Ranking CLS by performance and fundamentals #

According to my algorithm analysis, Celestica ranks in the 99th percentile for outperforming the S&P 500, and lands in the 70th percentile for overall fundamentals.

Translation: This is a fundamentally strong company and a technical outlier in terms of performance.

The setup — why I pulled the trigger on CLS #

Here’s where it gets interesting (and by interesting, I mean where I actually put my money where my mouth is):

• Monday (Jan. 27 2025): CLS takes a nosedive after the DeepSeek announcement, dropping below its 50-day moving average.
• Tuesday (Jan. 28 2025): Stock finds support, closes higher than open
• Wednesday (Jan. 29 2025): Stock is heavily oversold, gaps up over the 50MA on high volume — this is when I opened my position

Looking at the weekly chart, CLS wicked down below its 10-week moving average (10MA) but quickly rebounded, confirming strong support:

Celestica hit 3R within 24 hours — locked in profit #

On January 29th (the same day I opened the trade), Celestica reported earnings and revenue, gapping up in after hours trading.

By market open on Thursday, January 30th, CLS was up nearly 16%, reaching my 3R profit target (3x my initial risk).

Here’s how I managed it:

1. Sold 50% of my position at 3R. This locked in a 1.5% portfolio gain.
2. Moved my stop loss to break even. The rest of the position is now risk-free.
3. Letting the remaining shares ride. If CLS keeps running, I’ll continue peeling off profits.

Final thoughts #

The reaction to the DeepSeek announcement created a temporary buying opportunity in Celestica. The fundamentals are strong, the technicals aligned, and the risk/reward made sense.

I’m now in a partial free trade in under 24 hours — meaning even if the stock reverses, I walk away with a win (because nobody ever went broke taking profits).