For the trading week that ended December 9, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 25.4% compared to the prior week when it increased by 15.3%. The index consists of 21 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 6 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: TGODF -19.9%, CRON -19.0%, NEPT -18.0%, TRSSF -13.4%, HEXO -13.0%, and ALEAF -11.2%. In my view, Neptune Wellness Solutions Inc. is especially vulnerable to further price decline going forward for reasons I articulated in the prior week’s report.
                   

The Ugly

There were 5 stocks that decreased by 20% or more, which is my metric for inclusion in this category: CGC -35.4%, TLRY -27.2%, OGI -24.3%, VLNS -22.5%, and ACB -22.1%. The 3 top “ugly” stocks this week (Canopy Growth Corporation, Tilray Brands, Inc., and OrganiGram Holdings Inc.) were “good” stocks in the prior week and are likely to be under price pressure for the remainder of Q4.
 

Valuation Metric Review

There was a decrease of 25.4% in the “Big Four” (all of which decreased) compared to the prior week when there was an increase of 16.3%. This 41.7% difference is 1 of the biggest % reversals of 2022. I have advised my private clients that CGC is most worthy of option consideration, and TLRY is another high-capitalization stock in the crosshairs of a mercurial market environment.
 

Recap

None of the 21 stocks in the MCCCI increased, which is another indicator of the pervasive upheaval in the sector. There was no change in the relative strength index compared to the prior week when there was a decrease of 3.6%. Let us see how this volatile sector has performed at the same time next week, shall we?

More By This Author:

The Canadian Cannabis Report - Monday, Dec. 5
The Canadian Cannabis Report - Monday, Nov.28
The Canadian Cannabis Report - Monday, Nov. 21