The Canadian Pure-Play Pot Stocks Index consists of the 5 largest vertically integrated (i.e. seed-to-sale) Licensed Producers (LPs) with market capitalizations of $300M or more whose stocks trade for US$1/share or more and trade on one or more of the Canadian and/or American stock exchanges.

Below are the performances of its constituents for the week ending July 22nd, in descending order, since the end of May (7 weeks), and YTD with each stock's current Operating Cash Flow, Price-to Earnings (P/E) Ratio, Altman-Z Score, Piotroski F Score, Return on Equity (ROE) and Return on Assets (ROA) which should help you assess the financial health of each company, how well the company is being managed and the extent to which the company is over- or under-valued compared to its peers. (The definitions of each metric are detailed at the bottom of the article.)

The Canadian Pure-Play LP Pot Stock Index

1. Canopy Growth (CGC) was UP 14.7% this week, went DOWN 47.3% in the last 7 weeks and is still DOWN 70.6% YTD
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Altman Z-Score: 0.9 (65% chance of financial distress in the next 2 years)
   • Piotroski F Score: 4
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
   • Recent Analysis/Commentary: Go here
2. Tilray (TLRY) was UP 6.1% this week, went DOWN 23.1% in the last 7 weeks and is still DOWN 50.2% YTD
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Altman Z-Score: 1.0 (68% chance of financial distress in the next 2 years)
   • Piotroski F Score: 5
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
   • Recent Analysis/Commentary: Go here
3. Cronos (CRON) was UP 3.4% this week, went UP 0.3% in the last 7 weeks but is still DOWN 22.4% YTD
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Altman Z-Score: 15.2 (less than 1% chance of financial distress in the next 2 years)
   • Piotroski F Score: 8
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
   • Recent Analysis/Commentary: Go here
4. Aurora (ACB) was UP 2.4% this week, went DOWN 16.1% in the last 7 weeks and is still DOWN 73.9% YTD
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Altman Z-Score: 0.0 (52% chance of financial distress in the next 2 years)
   • Piotroski F Score: 4
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
   • Recent Analysis/Commentary: Go here
5. Organigram (OGI) was UP 1.9% this week, went  DOWN 9.5% in the last 7 weeks and is now DOWN 40.0% YTD
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow:No
   • Altman Z-Score: 3.1 (less than 1% chance of financial distress in the next 2 years)
   • Piotroski F Score: 7
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
   • Recent Analysis/Commentary: Go here

In total, the munKNEE Canadian Pot Stocks Index was UP 6.4% this week but went DOWN 24.5% in the last 7 weeks and is still DOWN 56.9% YTD.

Hopefully, the above information will help you assess the relative financial health of each company, how well the company is being managed, and the extent to which the company is over- or under-valued compared to its peers.

Definitions:

Operating Cash Flow:

• Is money involved directly with the production and sale of goods from ordinary operations or, in other words, money coming in through sales minus operating expenses.
• Without positive operating cash flow a business doesn’t survive and, as such, is the best measure of a company’s financial and operational health.

Price/Earnings (P/E) Ratio:

• Is a measure a company's share price to its earnings per share and has the most value when compared against similar companies in the same industry or for a single company across a period of time.
• Helps one determine whether a stock is overvalued (a high P/E) or undervalued (a low P/E) and can also be benchmarked against other stocks in the same industry or against the broader market.

The Altman-Z Score:

• Is a numerical measurement used to predict the chances of a business going bankrupt in the next two years and has an accuracy that ranges from 82% and 94%.
• Is based on five financial ratios - profitability, leverage, liquidity, solvency, and activity. 

The Piotroski F Score:

• Is a back-tested strategy that rates how strong the financial fundamentals are for a value stock and in back-testing of the system against the market between 1976 and 1996 the system it would have beaten the average return on the stock market by 13.4%.
• A score of 0-3 indicates that the company has weak fundamentals while a score of 8-9 indicates a company with powerful fundamentals that are most likely to keep performing well in the future.

Return on Equity (ROE)

• Is a measure of how many dollars of profit are generated as a percentage of each dollar of shareholder's equity and, as such, is a metric of how well the company utilizes its equity to generate profits.
• The higher the ROE, the better a company is at converting its equity financing into profits.

Return on Assets (ROA)

• Is a measure that indicates how profitable a company's net income is as a percentage of its total assets and, as such, factors in a company's debt while return on equity does not.
• A higher ROA means a company is more efficient and productive at managing its balance sheet to generate profits while a lower ROA indicates there is room for improvement.

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