For the trading week ended January 21, 2022, there was a decrease of 13.6% in my proprietary Canadian Cannabis Company Index (MCCCI) compared to the prior week when there was no change. The index consists of 22 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. 

Image by Herbal Hemp from Pixabay

The 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.

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 11 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: ACB -19.0%, FLWPF -17.0%, HEXO -16.0%, TLRY -15.6%, CBWTF -14.7%, VLNS -13.8%, TRSSF- 13.6%, CGC -13.2%, ALEAF -12.8%, CRON -12.7% and OGI -12.2% per SeekingAlpha.com. Aurora Cannabis Inc. has a sea of red ink to deal with in addition to the general malaise of the sector. HEXO- a stock that I issued a “Code Blue Alert” on- and has since lost over 90% of market capitalization- is now on my DNR (do not resuscitate) list. In my view, this stock is simply not worth its current price of $0.53.

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 precipitous decrease of 14.6% in the “Big Four” compared to the prior week when there was no change. Perhaps it was premature of me to speculate regarding equilibrium in last week’s report.

Recap

None of the 22 stocks in the portfolio increased- an existential event in the history of the MCCCI- and the new metric that I’ve alluded to recently signals pronounced froth going forward. There was a decrease of 4.5% in the relative strength index compared to the prior week when there was an increase of 3.9%. Let us see how this volatile sector has performed at the same time next week shall we?