Helix TCS Inc (OTCMKTS:HLIX) has bottomed out, after a steep decline in share price in recent months. The signing of a merger agreement with BioTrackTHC and expansion of operations in California continues to strengthened investors’ confidence in the stock, consequently fuelling a buying spree in the stock.
Trading volumes have since peaked above the 60 million mark an indication investors are slowly building positions in the stock. The stock is due for further movements on the upside, given the strength of the upward momentum supported by strong fundamentals.
Over the last one month, the stock has rallied by more than 120%. The uptrend faces immediate resistance at the $4.50 mark, above which the stock could make a push for the $6 a share mark. Any sell-offs, in the short term, should be limited to the $2 a share mark, below which the stock could tank to 52-week lows.
Before we look at the catalysts behind the recent momentum, let us first understand what Helix TCS does, in pursuit of growth and shareholder value.
Helix TCS bills itself as a premier provider of integrated operating environment solutions for the legal cannabis industry. The company owns a proprietary software suite and partnership platform that helps clients manage inventory and supply costs in the industry.
The company also seeks to provide clients in the cannabis industry with high standard security solutions including transportation, training, and other special services.
California Expansion Drive
Renewed investor interest in Helix TCS builds on the company’s growing focus on California’s legal cannabis industry. In addition to providing transportation and compliance services, the company plans to leverage its growing suite of software solutions in pursuit of opportunities in the multi-billion dollar California market.
Expansion in California’s legal cannabis market should help supplement the company’s revenue streams that until now has been focused on the Colorado market. California presents unique opportunities given the size of its recreational and medical marijuana market, which is one of the largest in the world.
“Helix TCS continues to execute tightly on its strategic plan, and we intend to grow in the California market with the same speed and success that we’ve had in the Colorado market,” said CEO Zachary L. Venegas. “We continue to hone our service offerings and service delivery to help our customers operate as safely, efficiently, and profitably as possible.
Implementation of new regulations under the Control Regulate and Tax Adult Use Marijuana Act could see the California Legal cannabis market, surpassing the $5 billion mark in annual revenue.
Helix TCS has since moved to strengthen its efforts on the development of software solutions for the cannabis business, with the acquisition of BioTrackTHC. While the two companies will continue to operate independently, they will complement each other efforts on coming up with solutions for targeting the fast-growing industry.
“After a very lengthy and competitive process, we have agreed to terms with the company and major shareholders, and have signed a definitive agreement, creating the largest ancillary cannabis company in the industry. The combined firm will offer industry-leading services to clients, improving their ability to serve their customers while increasing efficiency and profitability,” stated Mr. Venegas.
BioTrackTHC joins Helix TCS with 9 government contracts. One of its notable solutions is a seed-to-sale traceability software. It also provides commercial inventory management and point of sale solutions to 2,200 cannabis operators in 29 states and in 5 countries.
According to BioTrackTHC CEO, Patrick Vo, the merger should allow the combined company enjoy accelerated growth by coming up with unique products and solutions.
Helix TCS has been aggressive on the merger and acquisition front as it looks to strengthen its growth prospects in the legal cannabis industry. Mid last year, the company completed the acquisition of Security Grade, as it sought to enhance its full-service security solutions to cannabis business clients.
The acquisition of Security Grade has allowed Helix TCS to expand its suite of operating solutions including IT security, video surveillance programs software and private investigations.
The merger has also allowed the two companies to benefit from a sharpened competitive edge as well as operational efficiencies, a key to driving shareholder value.
Helix TCS 2018 Outlook
Helix TCS has achieved important strides in its bid to become a market leader in the legal cannabis Industry. Having achieved substantial growth in Colorado, the company has set its eyes on the California market, which is one of the largest in the world.
Mergers and acquisitions have helped strengthen the company’s transportation and software business. That said it is only a matter of time before the company starts generating value from its operations and solutions, more so in the California market.
The company remains well positioned to flourish as more companies look for transportation services and software solutions to target customers in the multi-billion industry.
A bounce from all-time lows on increased trading volumes has all but strengthened our resolve that the stock is a good bounce-back play, at current levels.
Disclosure: We have no position in HLIX and have not been compensated for this article.