The market is feeling the weight of a more than six year rally, and investors are hard pressed to find growth that equals current valuations. There is one segment that continues to plow ahead, year in and year out, with growth, revenues and a path forward that looks better than the path traveled.

A new report from Cowen points to the major factors that continue to drive demand in communications infrastructure, notably fiber and data centers. One key point they make is that demand is robust and very well-rounded, and that these assets will be relevant for generations to come. We screened the Cowen report for stocks rated Outperform and came up with four that serious aggressive growth investors may want to consider.

American Tower

This top company printed an all-time high last November and has traded down to sideways for almost a year as it pushes back to that level. American Tower Corp. (NYSE: AMT) is one of the largest global real estate investment trusts (REITs). It is a leading independent owner, operator and developer of multi-tenant communications real estate with a portfolio of approximately 97,000 communications sites, and it is on track to own and operate 100,000 cell towers by the end of 2015, both U.S. and international operations. It is also reported that the company is already processing about 900 applications in its pipeline to add additional carriers to the newly acquired Verizon towers.

While the company reported strong organic growth of 9.5% in 2014, that is expected to slow back to a more normal 7% range as large carriers like AT&T pull back some spending and expansion. Even with the number coming more in line with usual growth, next year is expected to be the same or higher, and for a stock that traded sideways to down for the past year that could be a precursor to a breakout.

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American Tower investors are paid a 1.75% dividend. The Cowen price target for the stock is $119. The Thomson/First Call consensus price target is $114.44. The shares closed Wednesday at $100.40.
Cogent Communications

This stock has been a top idea at Cowen for some time. Cogent Communications Group Inc. (NASDAQ: CCOI) is a key provider of Netflix’s Tier 1 services and looks to continue to be a winner. The company is a multinational, Tier 1 facilities-based Internet services provider, consistently ranked as one of the top five Internet backbone networks in the world. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport and colocation services. Cogent’s facilities-based, all-optical IP network provides services in 190 markets globally.

The company missed second-quarter earnings expectations and got hit extremely hard. In fact, the stock is down almost 25% from the highs posted back in February. With the stock trading at levels not seen in almost two years, investors may be looking at an incredible entry point for a company that could well be a takeover target.

Cogent investors are paid an outstanding 4.66% dividend. The Cowen price target is posted at $38, and the consensus target is $35.36. The stock closed on Wednesday at $28.92.

Level 3 Communications

This top company provides local, national and global communications services to enterprise, government and carrier customers. Level 3 Communications Inc.’s (NYSE: LVLT) comprehensive portfolio of secure, managed solutions includes fiber and infrastructure solutions; IP-based voice and data communications; wide-area Ethernet services; video and content distribution; and data center and cloud-based solutions. Level 3 serves customers in more than 500 markets in over 60 countries over a global services platform anchored by owned fiber networks on three continents and connected by extensive undersea facilities.

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The Cowen team has been good at spotting past trends from the company, and they once pointed to the TW Telecom opportunities among others as a real positive going forward, which they continue to feel is a big plus in the company’s favor. Level 3 reported second-quarter numbers that beat expectations on the earnings side, though revenues came up short. The company reiterated its adjusted EBITDA growth outlook at 14% to 17% and free cash flow guidance at $600 million to $650 million.

The analyst also believes mergers and acquisitions could be in the company’s future, as well as a stock buyback program. This stock is a potential as a core long-term holding.

The Cowen price objective is $62, while the consensus target is $60.29. The stock closed most recently at $49.02.

Zayo

This company had a well-received initial public offering last fall. Zayo Group Holdings Inc. (NYSE: ZAYO) provides comprehensive bandwidth infrastructure services in over 300 markets throughout the United States and Europe. Zayo delivers a suite of dark fiber, mobile infrastructure, and cloud and connectivity services to wireline and wireless customers, data centers, Internet content providers, high-bandwidth enterprises and government agencies across its robust 82,000 route mile network. The company also offers 45 carrier-neutral data center facilities across the United States and France. Zayo was the first to offer bandwidth shopping and buying in under two minutes through Tranzact.

Several Wall Street firms love the strong defensive business model and cite the company’s solid growth trajectory, the highly recurring revenue model, high incremental EBITDA margins, management’s experience and ability to drive high returns on invested capital. Like others in the industry, Zayo’s favorable multiyear secular tailwinds, as well as the increased probability of a REIT structure over the long term, make it a solid buy for investors now.

The $33 Cowen price target is higher than the consensus target of $30.80. The stock closed on Wednesday at $28.83.

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The bottom line for investors is that wireless, bandwidth and content delivery are continuing to grow exponentially, and that growth is expected to continue for years. While the top companies will be forced to keep their competitive edge, once well ensconced with providers and carriers, they could be in the driver’s seat for years.

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