Brighter Skies Ahead at Celestica?

By Mara Der Hovanesian

There's no sign the tech storm will pass anytime soon. That's grim news for electronics outfits such as Celestica (CLS ), Flextronics International (FLEX ), and Solectron (SLR ): Not until the computer, cell-phone, and telecom makers rev up production and outsourcing will they see a rebound. Right now, high tech farms out only 15% of its manufacturing. Bear Stearns reckons $26 billion from such work could be generated in the next year if things pick up.

Outsourcers have been restructuring, says Todd Coupland of CIBC World Markets, and a small uptick in orders could boost their profits. "It's going to be in small steps," he thinks. If investors are willing to take a giant leap, Coupland's choice is Celestica, run by former IBM execs. First-quarter earnings were 26 cents a share, down from 31 cents last year, and Coupland, who owns about 5,000 shares, dropped his yearly forecast from $1.45 to $1.20. But his price target of 56 is bullish, with the stock at 31. Analyst Chris Whitmore of Deutsche Bank has a similar take. "Celestica is in one of the best positions for the long term."

Gene G. Marcial is on vacation.

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