Vladislav Shchukin
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Roundy. Outsider will be bought.

  In the consumer market there are many small companies that not only product goods, but also sale. Of course, the most successful of them are attractive investment for larger players. This allows to expand the company and increase market share. Mergers naturally have a positive effect on the behavior of the stock. A similar situation occurred with the Roundy company's shares when Kroger company announced its intension to buy Roundy.

   November 11, 2015 Kroger said they would be happy to include Roundy in their company, and that the deal will be made until the end of this year. The deal is valued at $ 178 million, meant that the Kroger will pay $3.60 per share. On this news shares of the Roundy company rose from $ 2.18 to $ 3.57. As can be noted, the market immediately reacted to the changes and traders could make a good profit from this news. Today, the fluctuation is quite low.So should we expect a further rise in the share price?

   In our view, it makes sense to invest. The new management should have a positive impact on the company's financials, despite the current drop in sales. In addition, the increase in the number of supermarkets is announced under the control of the Roundy, which also affect the value of the company. And the relationship with a major player is often beneficial.

   We believe that in the long term, the Roundy's stocks should grow by early next year, when the deal will be made and a new financial report will be announced. Financial indicators will naturally grow up with the seasonal increase in sales at the end of the year.

  Our recommendation: BUY.