Now is the time.
I missed the boat on buying at the lows, but I have my order in to buy some more now. In my view, it is hard to go wrong buying SLVR below $1, because sooner or later the insiders or other interested parties will have to pony up enough money to drive the price above $1 to avoid delisting. Not, of course, that a stock price would ever be manipulated consciously. It would just be the market reacting to conditions. Anyway, I waited a couple days too long.
With regard to the financials, care should be exercised, with appropriate DD. The reason I say that is because the decrease in depreciation is likely due to not opening new stores last year. Also, when new store openings resume, financing will be required. Therefore, the profit reflected by these latest financials should be taken in context.
That being said, it looks as though the company is doing things right on all fronts. The stock profit sharing plan is both innovative and ethically correct (not the stellar 100 shares per employee -- a whole $100 bonus! -- but rather the percentage profit sharing based on same store sales increases). The concept of lower cost in-mall stores is sound. The fact that the insiders didn't vote themselves vast salary increases to eat up the profits (so to speak) is good news, and means that there is hope in the long run for price appreciation. My target continues to be 2001, and I don't mind holding that long. It will take three more restaurants to begin to overshadow the fixed overhead and administrative costs. After that, the profits should increase. I don't see franchising as a near term possibility, because it is too easy to put up a diner under another name. Should franchising be made to work for SLVR, there could be explosive growth as early as 2002, but more likely 2003. I think that instead the growth will be more linear, based on fundamentals, which to me appear sound.
I believe shareholders should not be overly concerned with the policy of refunding part of the meal cost or giving away meals sometimes. Repeat business is the name of the game. Do whatever it takes. Lock in the younger folks who don't have much money. They will not forget a cheery smile and a refund. What I see is a company founded on a reasonable business plan that is now taking the significant marketing step of doing business with focus on ethics and customer service. I believe this is the moral high ground, and I am investing in it accordingly. Maybe I'm foolish, but I would rather lose money in a good cause than make money when someone had to suffer for it. In this case, I believe I will make money and everyone will be happy. That is worth taking a risk for, in my view.
But I don't think the wealth will come this year or next year. It will take a little longer. For get rich quick schemes, there are plenty of other opportunities, where both risks and rewards are greater.
Please do your own DD. I am not giving investment advice. My analysis may be flawed. Regard the above as anecdotal only. Good luck to all. |
