The ultimate objective of every company is to have a positive operating cash flow (i.e., more money coming in from sales than operating expenses which is essential for a company to survive over the long term) and evidence that it is increasing from one quarter to the next.

If that is not the case, then a prospective investor should focus on whether or not the company has positive earnings before interest, taxes, depreciation, and amortization (EBITDA), evidence that it is increasing from one quarter to the next, and is showing a positive margin.

In addition, it is important to know the extent to which a company might encounter financial difficulty - even bankruptcy - in the next 2 years relative to its peers (as sourced from macroaxis.com).

Over the past few weeks the constituents in the munKNEE Canadian Cannabis LP Stocks Index, consisting of the 5 largest vertically integrated Licensed Producers, have announced their latest quarter financial results and their results are compared below, based on the above parameters, along with their stock performances from the end of trading on Friday, October 28th until the close of business on Tuesday, November 29th, in descending order as follows:

1. Canopy Growth (CGC): +8.6%
   • Positive Net Operating Cash Flow: N0
     • Growth in Net Operating Cash Flow: No
   • Positive EBITDA: No
     • Growth in EBITDA: No (-14.0%)
     • Positive EBITDA Margin: No (-81.4%)
   • Chance of Financial Distress within 2 years: +70%
   • Read: Canopy Growth Q2 Financial Report: Loss In Net Income Reduced Dramatically
2. OrganiGram (OGI): +3.1%
   • Positive Net Operating Cash Flow: N0
     • Growth in Net Operating Cash Flow: No
   • Positive EBITDA: Yes
     • Growth in EBITDA: Yes 
     • Positive EBITDA Margin: Yes 
   • Chance of Financial Distress within 2 years: <1%
   • Read: Organigram Q4 Financial Results: Record Net Revenue; Positive Adjusted EBITDA
3. Tilray (TLRY): +2.5%
   • Positive Net Operating Cash Flow: N0
     • Growth in Net Operating Cash Flow: No
   • Positive EBITDA: Yes
     • Growth in EBITDA: Yes (101.2%)
     • Positive EBITDA Margin: Yes (0.5%)
   • Chance of Financial Distress within 2 years: 66%
   • Read: Tilray Brands' Q1 Financials Show Major Improvement Over Previous Quarter
4. Cronos Group (CRON): -1.9%
   • Positive Net Operating Cash Flow: N0
     • Growth in Net Operating Cash Flow: No
   • Positive EBITDA: No
     • Growth in EBITDA: No (-22.5%)
     • Positive EBITDA Margin: No (-129.2%)
   • Chance of Financial Distress within 2 years: <1%
   • Read: Cronos Group Q3 Financial Report Disappointing: Stock Declines 10%
5. Aurora (ACB): -2.4%
   • Positive Net Operating Cash Flow: N0
     • Growth in Net Operating Cash Flow: No
   • Positive EBITDA: No
     • Growth in EBITDA: Yes (38.7%)
     • Positive EBITDA Margin: No (-117.5%)
   • Chance of Financial Distress within 2 years: 53%
   • Read: Aurora Cannabis Q1 Financials Show Improvement: Stock Jumps 18%

In total, the munKNEE Canadian Cannabis LPs Index has gone UP 2.5% since October 28th, 2022, but is still DOWN 53.7% since December 31st, 2021.

As I mentioned in an article on marijuana ETFs (see here),

• if you are interested in investing in the Canadian LP category the ETFs with the largest percentage of such stocks is the Global X Cannabis ETF (POTX),
• if you believe that the category has more or less bottomed and is setting the stage to surge upwards then you might want to consider investing in either the ETFMG 2x Daily Bull Alternative Harvest ETF (MJXL) or the Horizons 2x Bull Marijuana Companies ETF (HMJU).
• Conversely, if you think the category is going to decline further you might want to consider investing in either the inversely leveraged  ETFMG 2x Daily Inverse Alternative Harvest ETF  (MJIN) or the  BetaPro 2x Inverse Canadian Marijuana Companies ETF (HMJI).

More By This Author:

Organigram Q4 Financial Results: Record Net Revenue; Positive Adjusted EBITDA
Your Choice: Invest In LEGR (+9%) OR Bitcoin/Ethereum (-20%)
Infrastructure Bill Beneficiaries Index Continues To Outpace The S&P 500