For the trading week ended November 12, there was a humongous 20.8% increase 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. The MCCCIs 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.

Image by Herbal Hemp from Pixabay

The Good

There were 7 stocks that increased by more than 10% which is my metric for inclusion in this category: CBWTF +35.0%, CGC + 29.6%, HEXO +29.5%, ACB +27.7%, TRSSF +21.4%, TLRY +20.9% and CRON +17.2%. Auxly Cannabis Group Inc. is a repeater from last week, and perhaps the recent bullishness may be due to the upcoming earnings release. There has been a fair amount of credible chatter regarding 1 of the above stocks which I have relayed to my private clients who may dabble in options- which are not for the faint of heart, and then some.

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: FLWPF -15.4%, WDDMF -12.6%, and NXTTF -10.3%.

The Ugly

There was 1 stock that decreased by 20% or more, which is my metric for inclusion in this category: ALEAF. On 11/11/21 Aleafia Health Inc. issued their Q3 results which included a $53.1M impairment of intangible assets and an $11.3M impairment of goodwill. Ouch! Says this former CPA.

VALUATION METRIC REVIEW There was an increase of 26.4% increase in the “Big Four” compared to the prior week when there was a decrease of 3.2%. In last week’s report, I stated that “absent some material news developing, I expect the highest capitalization MCCCI stocks to be under pressure, with TLRY being the most volatile constituent.” Perhaps the manna from Heaven for cannabis bulls was an 11/14/21 news release regarding a GOP “pot bill.” Whether Santa delivers on this or leaves a lump of coal in the stockings of this constituency remains to be seen. But it is clear that the entire cannabis sector will be affected by the outcome.

Recap

There was a decrease of 3.2% in the relative strength index compared to the prior week when there was an increase of 1.9%. Let us see how this volatile sector has performed at the same time next week shall we?