Shares of Cogent Communications (CCOI) - Get Cogent Communications Holdings Inc Report are up an impressive 23% thus far in 2016, raising the company's 2017 price-to-earnings multiple to a lofty 61. Vince Rivers, portfolio manager for the JOHCM U.S. Small Mid Cap Equity Fund (JODIX), said he still likes the high-speed Internet provider's shares and does not see the stock as expensive despite the run-up.
"Cogent is trading at about 13 times EBITDA right now, which is below its historical average of 15 times, despite the fact that you should see growth this year driven by over-the-top video," said Rivers. "Cogent is probably the best pure play on that trend of any stock we see in the market today, if you can't playNetflix (NFLX) - Get Netflix, Inc. Report directly."
The JOHCM U.S. Small Mid Cap Equity Fund is up 5.7% thus far in 2016, according to Morningstar. The $5.4 million fund is down 2.5% over the past 12 months, outpacing 66% of its peers in Morningstar's mid-cap growth category.
Staying in telecom, Rivers is also bullish on wireless infrastructure provider CommScope (COMM) - Get CommScope Holding Co., Inc. Report , which is up 25% year to date. The company is a "big play on small cells," he said.
"As the large carriers across the globe are reinventing their networks and moving to small cells, they are one of the key providers of the small cell technology," said Rivers. It remains a cheap stock despite the run-up, he said, with 30% more upside available.
First American Financial (FAF) - Get First American Financial Corporation Report , which is up 16% thus far in 2016, is another one of Rivers' top picks. He said the housing cycle has more room to run, with low interest rates and improving employment, and the mortgage insurer will be a beneficiary.
"They benefit from the volumes increasing in the marketplace," said Rivers,
In a similar vein, Rivers is positive on HD Supply Holdings (HDS) - Get HD Supply Holdings, Inc. Report , which is up 20% year to date. The industrial distributor will benefit directly from an acceleration in housing, in his opinion. It also trades "below its mean multiple," he said.