Cable Takeover Chatter Send Charter To New 52-Week High

Not many on the Street are talking about it, but Charter Communications Inc. (NASDAQ: CHTR) hit a new 52-week high Thursday. Looking behind the headlines, there is a lot of chatter about consolidation in the cable industry.

According to Bloomberg News, the talk first arose when media execs gathered at the annual Allen & Co. conference last week. Charter chairman Paul Allen said that consolidation in the cable industry is "a given" and Mario Gabelli, who was also at the conference, named names and said that he believed Charter is a prime target of industry consolidation.

Though Charter is probably a long shot candidate because of its debt situation, it's safe to say those comments have sparked trading this week. Charter traded 54.6 million shares Tuesday and is on its way to trade over 30 million today, much higher than the norm of just 12.7 million a day. And even if a deal doesn't occur, you probably can't go wrong sticking with strength because the bull case for cable remains strong, evidenced by the Dolan family's bid to take Cablevision Systems Corp. (NYSE: CVC) private.

In a recent analyst note, Bernstein Research analyst Craig Moffet wrote that with better cash flow and lower capital intensity over the next few years, "Cablevision's proxy supports a view that all cable stocks are strikingly undervalued."

CHTR 1-yr chart: