The Canadian Cannabis Report - Monday, May 30

For the trading week ended May 27, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 8.7% compared to the prior week when it increased by 8.7%. 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 no stocks that increased by more than 10% (but less than 20%) which is my metric for inclusion in this category.

The Bad

There were 2 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: NXTTF -16.7% and HEXO -10.7%.

The Ugly

There was 1 stock that decreased by 20% or more, which is my metric for inclusion in this category: ACB -41.0%. On 5/27/22 Aurora Cannabis Inc. announced an upsized bought deal financing which eviscerated the stock price. I intend to closely monitor if this acts as a proxy for the other Tier I MCCCI constituents.

Valuation Metric Review

There was a decrease of 14.7% in the “Big Four” compared to last week when there was an increase of 7.7%. In addition to the meltdown of ACB, the other 3 also decreased. I am inclined to believe that this trend may continue, at least in the near-term.

Recap

4 of the 22 stocks in the portfolio increased, perhaps in response to the poor performance of the "Big Four." There was an increase of 2.9% in the relative strength index compared to the prior week when there was an increase of 7.8%. Let us see how this volatile sector has performed at the same time next week, shall we? Disclaimer: The information provided in this article is for general informational purposes only.