Versace: Stocks for the Consolidating Grocery Biz

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Ever since the announced acquisition of Time Warner Cable (TWC) by Comcast (CMCSA), there has been a modest uproar over the potential move higher in cable-service prices. Industry data show that cable bills have already been on the rise: The average bill for basic cable in the U.S. climbed to $78 per month in 2013, up from $38 a month in 2000. Keep in mind that this is for basic cable and does not include premium channels, Internet or telephone service. A recent report by NPD Group says that cable prices increased by 6% every year, and NPD predicts that by 2015, the average cable bill will be $123 and will soar to $200 by 2020.

If consumers are truly concerned about the prospect of price increases, however, they should be as concerned with the renewed mergers-and-acquisition activity in supermarkets.

Last year, supermarket giant Kroger (KR) acquired Harris Teeter, and Cerberus Capital Management bought five smaller chains, including the remaining Albertson's stores that it did not already own. More recently, Cerberus announced its intent to acquire Albertson's rival Safeway (SWY) for $9.4 billion, or $40 per share. After the merger, the combined companies' share of the U.S. grocery market would rise by 42% to roughly 8%. Plunkett Research puts the industry size for U.S. supermarket and food-and-beverage store sales at $650.1 billion. Adding nontraditional food stores and convenience-store sales almost doubles the market size. 

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