The Canadian Cannabis Report - Monday, July 25

For the trading week ended July 22, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 8.5 % compared to the prior week when it decreased by 2.5%. 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. 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 3 stocks that increased by more than 10%, which is my metric for inclusion in this category: MEDIF +20.0%, VLNS +12.5%, and CGC 11.2%.
 

The Bad

There were no stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category.
 

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 an increase of 9.6% in the “Big Four” (all of which decreased) compared to the prior week when there was a decrease of 10.4%. Although Canopy Growth Corporation rebounded sharply (going from a “bad” stock to a “good” stock) I believe that this may be a transitory situation.
 

Recap

2 of the 22 stocks in the MCCCI decreased, reflective of the broad-based rally in the sector. There was an increase of 9.3% in the relative strength index compared to the prior week when there was an increase of 4.2 %. Another positive metric was that the 13 highest-capitalization stocks in the MCCCI increased. However, I remain unconvinced that a bull market in the sector is on the horizon. Let us see how this volatile sector has performed at the same time next week, shall we? 

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