Terra Tech Corp: Outlook Turns Bullish for This $0.41 Cannabis Stock
Terra Tech Corp Makes Big Investment in Itself, Shares Soar
Terra Tech Corp (OTCMKTS:TRTC) started the year out strong, but, like the rest of the cannabis industry, it has been frustrating investors. By mid-March, the company had seen its share price soar 235% year-to-date. But as of this writing, TRTC stock is trading at $0.41 per share, down 27% since the start of 2019.
All is not lost though; thanks to a number of new developments, the outlook for Terra Tech stock has turned bullish.
Recently, the company announced it would be repurchasing $20.0 million worth of its own stock. This is in addition to a previously-announced repurchase of shares connected to the settlement of a lawsuit.
Terra Tech also recently launched a cannabis delivery service in California and opened a “Blüm CBD” retail location in Downtown Las Vegas.
Furthermore, as part of the company’s streamlining efforts to cut non-core assets, Terra Tech sold its Blüm CBD retail assets in Reno. The company has also zeroed in on some potential acquisition targets.
All this has helped Terra Tech report solid revenue growth and clears a path toward profitability.
TRTC Stock Overview
Terra Tech Corp is a vertically integrated (seed-to-sale) agricultural business based in Irvine, California. The company operates several subsidiaries, serving the cannabis and agriculture sectors. These include Blüm, IVXX, Inc., Edible Garden, and MediFarm LLC. (Source: “Investor Presentation April 2019,” Terra Tech Corp, last accessed September 19, 2019.)
Blüm is the company’s retail division that provides medical and recreational marijuana in California and Nevada. At its dispensaries, consumers can get their hands on everything from flower, concentrated cannabis products, and edibles.
IVXX creates various medical and recreational marijuana products in labs. IVXX-branded products are available in more than 200 stores, including the Blüm dispensaries.
The MediFarm subsidiary secures permits for Terra Tech for cannabis cultivation, production, and dispensaries in California and Nevada.
Terra Tech doesn’t just operate in the weed sector. Through its wholly-owned Edible Garden subsidiary, the company grows hydroponic produce, including lettuce and herbs. You can find Edible Garden products at major grocery stores, including Walmart Inc (NYSE:WMT), Kroger Co (NYSE:KR), and ShopRite Holdings Ltd (OTCMKTS:SRGHY, JSE:SHP).
TRTC Stock Information
|Market Cap||$45.1 Million|
|Shares Outstanding||110.0 Million|
|50-Day Moving Average||$0.40|
|200-Day Moving Average||$0.66|
(Source: “Terra Tech Corp. (TRTC),” Yahoo! Finance, last accessed September 19, 2019.)
Terra Tech Sells Off Assets in Reno
On August 19, Terra Tech announced that it had sold off all of the assets of its Blüm retail location in Reno, including the building, for $15.0 million. Selling the retail license and store was a milestone in the company’s restructuring plan. (Source: “Terra Tech Corp. Announces Sale of its Blum Reno Retail Assets for $15 Million,” Terra Tech Corp, August 19, 2019.)
The dispensary only opened in January 2017, but since then, the location grew in value. Selling the assets just made sense.
The sale will help juice the company’s balance sheet and fuel growth. It was a far better idea than holding onto assets the company didn’t necessarily want and having to go to the capital markets more than necessary.
Lawsuit Settled With VandeVrede Family
On September 11, Terra Tech Corp announced that it settled lawsuits with the VandeVrede family and entities that the family-controlled. As part of the settlement, Terra Tech agreed to repurchase all of the company’s common and preferred shares that the family-owned. (Source: “Terra Tech Corp. Announces Settlement of Lawsuits with Vande Vrede Family,” Terra Tech Corp, September 11, 2019.)
In April 2018, Terra Tech announced that Ken VandeVrede had resigned from its board. VandeVrede said in his resignation letter that his decision was motivated by disagreements related to the company’s operations, policies, and practices. (Source: “Terra Tech director resigns due to disagreement,” S&P Global Market Intelligence, April 25, 2018.)
Not so, said Terra Tech. The company said it believed that VandeVrede resigned because he was let go as the company’s chief agricultural officer on April 13.
Prior to VandeVrede’s resignation, Terra Tech sued him for breach of contract, breach of fiduciary duties, fraud, misappropriation of trade secrets, conspiracy, and more.
Terra Tech also sued Brian VandeVrede, Daniel VandeVrede, Greda VandeVrede, Michael VandeVrede, Steven VandeVrede, Beverly Willekes, Gro-Rite Inc., and Naturally Beautiful Plant Products LLC.
$20-Million Terra Tech Stock Repurchase
On September 16, Terra Tech Corp management sent an encouraging sign to investors when it announced that it would be repurchasing up to $20.0 million in TRTC stock. (Source: “Terra Tech Announces $20,000,000 Share Buyback Program,” September 16, 2019.)
This was in addition to the previously announced repurchase of shares from members of the VandeVrede family.
“We believe that Terra Tech’s current market value does not reflect the underlying value of its business and future prospects and that implementing a share buyback program is the best way we can return value to shareholders,” said CEO Derek Peterson.
With a current market cap of $42.9 million for Terra Tech, these stock repurchases will account for a huge percentage of the company’s shares being returned.
Solid Second-Quarter Results
On August 8, Terra Tech Corp announced that its revenue for the second quarter of 2019, ended June 30, increased 19% year-over-year to $10.4 million. That was up from $8.7 million in the same period last year. (Source: “Terra Tech Corp. Reports Financial Results for the Second Quarter of 2019,” Terra Tech Corp, August 8, 2019.)
The company reported a second-quarter net loss of $10.14 million ($0.10 per share), versus a loss of $9.97 million ($0.15 per share) in the second quarter of 2018.
Terra Tech ended the quarter with $1.9 million in cash.
In the second quarter, the company introduced a cannabis delivery service in Santa Ana and the surrounding area. Also in the quarter, the Blüm dispensary in San Leandro began selling recreational pot.
The company’s Blüm retail store in Oakland reported strong sales during the second quarter. Also in Oakland, Terra Tech is in the final stretches of constructing a 13,000-square-foot cultivation facility.
Over the last year, Terra Tech Corp had been mired in a number of controversies, including lawsuits—which have now been concluded to the company’s satisfaction.
Terra Tech has a strong balance sheet, and thanks to restructuring, it has leaner operations.
These efforts are expected to bear fruit in future quarters as the company’s retail position strengthens. The improvements could boost the price of Terra Tech stock.