You know that you have entered Twilight Zone territory when a restaurant name, in the case Fiesta Restaurant Group (FRGI) , is rewarded for posting same store sales declines in the low teens. That's what happened yesterday after market close when the company released comps for the first two weeks of July which showed sales down 12.2% at its Pollo Tropical locations, and down 13.4% at Taco Cabana, versus the same period last year.
In the scheme of things, in this bizarre environment we are living in, I guess that may be a victory of sorts especially considering the fact that April comps were down 49.2% and 26.2% at Pollo Tropical and Taco Cabana, respectively. The market thought so, sending FRGI shares up 12.5% in after hours-trading on Thursday. The company also reported that cash had grown from $75 million in early April to nearly $102 million in late June. However, that was funded by what a lot of companies are doing these days, tapping a revolving credit facility. Debt, which was $73 million at the end of the first quarter, rose to $150 million at the end of the second quarter. Last week, the company paid down $30 million on its revolver, a good sign, that is if we do not have to endure another massive economic shutdown.
Elsewhere, silver, aka "the poor man's gold", has made a major move since bottoming in March at just under $12/ounce, closing at $19.34 (spot price) on Thursday, very close to a four-year high. It's hard to believe that four months have passed since silver was at an 11 year low, and the premium of physical silver to the spot price was 95%. That's what fear will do, as investors clamored for silver they could hold in their hand, rather than something on paper such as an ETF. I'd expected that the premium gap would close between physical silver and the spot price, and indeed it has, primarily due to the rise in the spot price. The price of physical silver has risen since March. Back then when my column ran, a $100 bag of junk silver cost about $1475 (71.5 ounces of silver), or $20.62/ounce. That same bag today will run you about $1655, or about $23.15/ounce. That's still a 20% premium to the spot price which is considerable, but nowhere near the 95% premium we saw in March.
I've seen times when there is little to no premium for physical silver, but those days may be done.
Have a great weekend!
