For the trading week that ended May 26, 2023, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 15.1% compared to the prior week when it increased by 4.1%. The index consists of 16 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: ACB  +22.2%%, CRON +20.5%, and OGI +11.0%. Aurora Cannabis Inc. and OrganiGram Holdings Inc. were on the prior week’s “bad” list.
 

The Bad         

There were 3 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: TLRY -19.9%, NEPT -19.4%, and ACB -18.5%. I have been bearish on Tilray Brands, Inc. for a year.
 

The Ugly

There were 3 stocks that decreased by 20% or more, which is my metric for inclusion in this category: HEXO -28.2%, ALEAF -22.9%, and CGC -20.6%. HEXO Corp. shareholders will soon vote on the proposed acquisition by TLRY, which I expect to be approved.  Nonetheless, I consider this to be a 1+1<2 situation.
 

Valuation Metric Review

There was a decrease of 17.4% in the “Big Four” (all of which decreased) compared to the prior week when there was an increase of 4.3%. 9 of the top 10 market capitalization MCCCI stocks decreased which further acquits my thesis that the sector will be challenged going forward.
 

Recap

There was a decrease of 30.2% in the relative strength index compared to the prior week when there was an increase of 12.8.8%. Let us see how this volatile sector has performed at the same time next week, shall we?

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