For the (shortened) trading week that ended December 29, 2023, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 5.5% compared to the prior week when it decreased by 9.8%. The index consists of 14 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 was 1 stock that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category:  NEPT -18.1%. Neptune Wellness Solutions Inc. was an “ugly” stock last in the prior week  when I called it a “challenged stock.” The company has a paltry market capitalization of $2.4M and decreased 95.4% in 2023. There was significant insider selling in Q4 and in my view, NEPT has an uncertain future. In my view, the company may not survive 2024 unless its intended acquisition of Datasys Group, Inc. is consummated and proves to be a success. The probability of this I believe is a dice roll.

The Ugly

There were no stocks that decreased by 20% or more, which is my metric for inclusion in this category.

Valuation Metric Review

There was a 6.0% increase in the “Big Four” (3 of which increased) compared to the prior week when there was a 4.2% decrease. 2023 was not kind to this cohort as 3 of the group decreased in value. The “biggest loser” of the year was Canopy Growth Corporation (CGC) which decreased 77.9%. I suppose some may consider this stock as a turnaround candidate for 2024 but I remain neutral on the company. I am currently doing a “deep dive” on this group and will report on my findings in the near future.

Recap

There was a 13.9% increase in the relative strength index compared to the prior week when there was a 5.3% decrease. I am reviewing the relevance of this metric and will likely make a change for 2024. 7 of the 14 MCCCI stocks increased,  to which I do not attribute any significance since ss during the holiday season trading tends to dissipate. Let us see how this volatile sector has performed at the same time next week, shall we?

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