Stock Pick: Terra Tech Corporation (TRTC)

Terra Tech Corporation (TRTC) is a cannabis-focused agricultural company. It specializes in cultivating and providing superior medical cannabis as well as other agricultural products. In addition, the company runs Blum, which is a retail dispensary of medical marijuana. Blum operates several dispensaries in California and Nevada.

Unlike many of our previous stock picks, TRTC is a speculative play. It has a small market capitalization of only 93.095 million and its fundamentals are not as strong as S&P 500 stocks. Nevertheless, TRTC offers a high reward to risk ratio.

Technical Analysis of Terra Tech Corporation (TRTC)

After a three-year bear market, it looks like TRTC is finally bottoming out. The stock dropped to as low as $0.461 in December 2018. At that point, it was down by over 97% from the all-time high of $21.2894. While many investors would not dare touch stocks that have lost so much value, this type of plunge is common in immature assets or companies. In reality, the plummet offers TRTC the chance to start a fresh market cycle. That’s what we’re betting on.

Technical analysis reveals that TRTC is carving a bottom. This view comes after the stock appears to have created a durable bottom $0.56 in February 2019. This attracted bottom pickers and bargain hunters. The increased buying activity catapulted the stock to as high as $1.88 this month.

While TRTC has been correcting since, it is important to note that the stock recorded its highest volume on the week of March 11. The stock generated volume of 36.414 million shares, which is almost 400% higher than its weekly average. This tells us that the smart money is likely accumulating shares at current levels.

Fundamental Analysis of Terra Tech Corporation (TRTC)

In addition to our technical analysis, fundamental analysis also supports our sideways trading view.

Based on the company’s annual income statement, TRTC has managed to grow its revenues from $7.09 million in 2014 to $31.33 million in 2018. That’s a growth of over 341% in four years. This tells us that there’s heavy demand for the company’s products.

What’s even more impressive is the growth of the company’s gross income. During the same four-year period, gross income skyrocketed from $152,992 to $12.43 million. This means TRTC is finding ways to reduce production costs and optimize gross profit margins.

The only reason why TRTC is not yet highly profitable is because of enormous SG&A (Selling, General, and Administrative) and gross interest expenses. No, the company is not using investor money to shower executives with big bonuses or launch expensive marketing campaigns. Research reveals that TRTC invested the money to upgrade production facilities and purchase a retail property in a high traffic area. The company took these steps to drive long-term growth.

The strategy is to be patient and to buy as close to $0.56 support as possible. TRTC is likely in accumulation and if this read is correct, it will spend time building a base close to $0.56. Thus, there’s no need to rush.

As long as the stock can stay above that level, it will likely generate the momentum to rally to our target of $1.22. Take that out and the next target is $1.88.

The timeline for the target is six months.

Weekly TRTC Chart

Monthly TRTC Chart

As of this writing, the Terra Tech Corporation stock (TRTC) is trading at $0.99.

Summary of Strategy

Buy: As close to $0.56 as possible.

Targets:  $1.22 and $1.88.

Stop: Close below $52.

 

Featured image courtesy of Shutterstock.

Disclaimer: The writer does not own shares of Terra Tech Corporation (TRTC).

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.