Celestica Inc (NYSE:CLS) Emerges as a High-Growth Momentum Powerhouse with Strong Fundamentals and Technical Setup

Investors using a high-growth momentum approach often look for firms with strong earnings growth, improving profit margins, and positive analyst updates, all while showing promising technical patterns for possible upward moves. This strategy blends growth fundamentals with technical indicators to spot stocks likely to keep performing well. Celestica Inc (NYSE:CLS) stands out as a strong option in this context, with a High Growth Momentum Rating of 6, a Technical Rating of 10, and a Setup Rating of 7. These ratings highlight solid earnings trends, a strong upward price movement, and a consolidation phase that could lead to further gains.

Fundamental Growth Momentum

Celestica fits multiple criteria important to high-growth momentum investors:

• Earnings Growth: The company posted a 51.1% year-over-year EPS increase (TTM), with recent quarterly growth staying strong at 39.5% (Q2Q). While the pace has slowed slightly—from 65.5% (Q-3) to 39.5% (latest quarter)—the track record of exceeding estimates is notable. Celestica has beaten EPS forecasts in each of the last four quarters by an average of 7.5%.
• Revenue Growth: Sales rose 21.0% year-over-year (TTM), with recent quarterly growth holding steady around 20%. Analyst projections for next year’s revenue have also improved, climbing 1.2% over the past three months, indicating growing confidence.
• Profit Margin Improvement: Net margins increased from 1.8% three years ago to 4.4% in the last fiscal year, though the most recent quarter saw a drop to 3.3% from 6.0% in the previous quarter. Investors will watch to see if this is a short-term shift or a longer-term change.
• Free Cash Flow Growth: FCF per share jumped 46.2% year-over-year, reflecting better operational efficiency.

These figures match the High Growth Momentum Rating’s emphasis on earnings surprises, estimate revisions, and margin trends—key factors for spotting firms with lasting momentum.

Technical Strength and Setup Quality

Celestica’s technical performance is equally strong, as outlined in its technical report:

• Trend Performance: The stock earns a top Technical Rating of 10, showing a clear uptrend across all timeframes. It remains well above rising 20-day ($158.55), 50-day ($137.02), and 200-day ($102.61) moving averages.
• Relative Performance: Celestica has outperformed 98% of all stocks over the past year, with a 211.3% 12-month return. It also ranks in the top 7% of its Electronic Equipment, Instruments & Components sector.
• Consolidation Pattern: The Setup Rating of 7 points to a recent narrowing in price movement, with support around $156.90–$161.96. A move above $173.64 (the 10-day high) could signal a return to the uptrend, while a drop below support would mark a potential downside risk.
• Bullish Signal: The technical report mentions a recent Pocket Pivot—a positive volume-driven pattern—further supporting the idea of institutional buying.

Why This Pairing Works

High-growth momentum strategies, like those based on CANSLIM or Minervini principles, focus on both earnings trends and technical strength. Celestica’s steady earnings outperformance, margin growth, and upward estimate revisions meet the fundamental requirements, while its technical setup presents a clear risk/reward scenario. Stocks with these traits often draw institutional attention, which can drive further gains.

For investors looking for similar opportunities, the High Growth Momentum Breakout Setups screen offers a filtered list of stocks matching these conditions.

Disclaimer: This analysis is not investment advice. Perform your own research and assess risk tolerance before making trading decisions.