For the trading week that ended May 12, 2023, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 9.0% compared to the prior week when it increased by 4.8%. The index consists of 16 stocks, many of which are among the most widely held holdings of the 3 ETFs (MJ, CNBS, and THCX) that I consider to be a reliable barometer of the Canadian cannabis sector. MCCCI's differentiated business model is both weighted and market capitalization based because I believe that this approach best represents the current landscape of the Canadian cannabis sector. Now let us look at this week’s good, bad, and ugly stocks, shall we?

Image by Herbal Hemp from Pixabay 

The Good

There were no stocks that increased by more than 10%, which is my metric for inclusion in this category:

The Bad

There were 5 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: ACB  -14.6%, TRSSF -13.0%,  CRON -13.0%, TLRY -11.8%, and OGI -10.8%. Aurora Cannabis Inc. did not report any news to provide clarity to this decline.

The Ugly

There were 2 stocks that decreased by 20% or more, which is my metric for inclusion in this category: NEPT -67.8%, and CGC -21.0%. On 5/11/23 Neptune Wellness Solutions Inc. announced a new stock filing which will dilutive to present shareholders. Canopy Growth Corporation resumed its decline after a 1-week hiatus and is now down 10 of the last 11 trading weeks.

Valuation Metric Review

There was a decrease of 15.4% in the “Big Four” (all of which decreased) compared to the prior week when there was an increase of 12.3%. The top 10 market capitalization MCCCI stocks decreased. Only 1 portfolio constituent increased, fueling my increased bearishness regarding the sector. I also believe even if the SAFE Act were to pass, there would not be a meaningful effect on the space.

Recap

There was an increase of 2.2% in the relative strength index compared to the prior week when there was a decrease of 2.1%. Let us see how this volatile sector has performed at the same time next week, shall we?

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The Canadian Cannabis Report - Monday, May 8
The Canadian Cannabis Report- Monday, May 1
The Canadian Cannabis Report- Monday, April 24