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It has been a mediocre year for Canadian tech stocks. The S&P/TSX Information Technology index is ahead 9.53% year to date, less than the TSX Composite.
Our biggest tech company, Shopify (TSX: SHOP), is doing somewhat better, with a gain of about 14% so far in 2025. But that’s well off the pace of last year’s 48% gain. Constellation Software (TSX: CSU) is up about 9% year-to-date, also well short of its pace last year when it gained 35%. Another 2024 high-flyer, Descartes Systems (TSX: DSG), which specializes in providing solutions for import/export businesses, is down about 10% as global trade slows in the face of Donald Trump’s tariff blitz.
There is one major exception to these disappointing results. Shares in Celestica Inc. continue their strong uptrend, now in its third year. The stock had traded in the $5 to $15 range from 2005 to the spring of 2023. Then it suddenly took off, posting gains of 154% in 2023 and 242% in 2024. So far this year, it’s up about 110%.
I added Celestica to my Internet Wealth Builder recommended list in November 2023 at $38.46. At that point, the p/e ratio was a very reasonable 16.72. The shares closed July 29 at $278.36, up 624% from our original recommendation. The p/e is now at 44.09, which is high but not outlandish for a tech stock (Nvidia is trading at 55 times earnings).
Toronto-based Celestica Inc. (TSX, NYSE: CLS) was originally part of IBM. In 1996, it was sold to Onyx Corp. It began trading publicly in 1998 with the sale of 20.6 million shares at US$17.50. The company employs 26,000 people.
Celestica has two operating segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS).
The ATS segment consists of its Aerospace and Defense, Industrial, HealthTech, and Capital Equipment businesses. The CCS segment consists of the company’s Communications and Enterprise (servers and storage) end markets.
The share price took a dive in January and plunged again in April in the wake of the “Liberation Day” tariff announcements. However, it recovered quickly and recently hit a new high of $296. First quarter results continued to show strong growth in revenue and earnings. Revenue for the three months to March 31 was $2.65 billion, up 20% from the same period in 2024. Adjusted earnings per share came in at $1.20 compared with $0.83 the year before. Note that the company reports in U.S. dollars.
CEO Rob Mionis said both figures surpassed the upper end of the company’s guidance range. “This strong performance was further highlighted by our highest ever adjusted operating margin of 7.1%,” he added.
The first quarter results and a strengthening demand have resulted in new guidance for the full 2025 fiscal year. Celestica now expects revenue to reach $10.85 billion, an increase from the prior forecast of $10.7 billion. Adjusted earnings per share are expected to be $5.00, up from the previous guidance of $4.75.
The stock does not pay a dividend, but the company spent $75 million in the quarter to buy back 600,000 shares.
The strong first-quarter results and the improved revenue and profit guidance are encouraging. I’ve advised readers of my Internet Wealth Builder newsletter to take half profits on the stock. New investors may want to watch for dips, preferably below $260, to take an initial position.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/ R&A Studio
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