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The munKNEE Conservative Cannabis Stocks Index consists of the 5 tobacco companies and 1 liquor company that are invested heavily in the cannabis industry.

Below is the performance of the constituents for the week ending July 15th, in descending order as well as since the end of May (6 weeks), and YTD, with each stock's current Operating Cash Flow, Price-to Earnings (P/E) Ratio, Altman-Z Score, Piotroski F Score, Return on Equity (ROE) and Return on Assets (ROA). This information should help you assess the financial health of each company, how well the company is being managed and the extent to which the company is over- or under-valued compared to its peers. (Definitions of each metric are detailed at the bottom of the article.)

1. Molson Coors (TAP) was UP 5.7% for the week ending July 15th, is UP 6.3% since the end of May and is now UP 26.5% YTD and has a Dividend Yield of 2.6%.
   • The company has a 57.5%/42.5% joint venture, called TRUSS, with Hexo Corp. (HEXO) which was DOWN 9.5% for the week ending July 15th, is DOWN 24.0% since the end of May and is now DOWN 72.9% YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 11.9%
     • Altman Z-Score: 1.4 (42% chance of financial distress in the next 2 years)
     • Piotroski F Score: 7
     • Return on Equity (ROE): 8%
     • Return on Assets (ROA): 2%
2. British American Tobacco (BTI) was UP 1.9% for the week ending July 15th, is DOWN 7.9% since the end of May and is now UP 10.3% YTD and has a Dividend Yield of 7.2%. 
   • The company has a C$221M investment and product development partnership with Organigram Holdings Inc. (OGI) which was DOWN 2.9% for the week ending July 15th and is now DOWN 12.1% since the end of May and is now DOWN 41.7% YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 10.3%
     • Altman Z-Score: 1.5 (33% chance of financial distress in the next 2 years)
     • Piotroski F Score: 6
     • Return on Equity (ROE): 11%
     • Return on Assets (ROA): 5%
3. Altria Group (MO) was UP 1.1% for the week ending July 15th, is DOWN 22.0% since the end of May and is now DOWN 11.4% YTD and has a Dividend Yield of 8.6%.
   • The company has a 45% stake in Cronos Group Inc. (CRON) which was DOWN 3.6% for the week ending July 15th, is DOWN 3.6% since the end of May and is now DOWN 25.0% YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 25.6%
     • Altman Z-Score: 3 (33% chance of financial distress in the next 2 years)
     • Piotroski F Score: 6
     • Return on Equity (ROE): Negative
     • Return on Assets (ROA): 20%
4. Constellation Brands (STZ) was UP 1.0% for the week ending July 15th, is DOWN 0.7% since the end of May and is now DOWN 2.6% YTD and has a Dividend Yield of 1.3%.
   • The company has a 39% stake in Canopy Growth Corporation  (CGC) which was DOWN 14.5% for the week ending July 15th, is DOWN 21.4% since the end of May and is now DOWN 74.3% YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 36.8%
     • Altman Z-Score: 3 (35% chance of financial distress in the next 2 years)
     • Piotroski F Score: 4
     • Return on Equity (ROE): 11%
     • Return on Assets (ROA): 6% 
5. Imperial Brands (IMBBY) was UP 0.8% for the week ending July 15th, is DOWN 3.5% since the end of May, and remains Unchanged in price YTD and has a Dividend Yield of 4.6%.
   • The company has a 19.9% stake in Auxly Cannabis Group Inc. (CBWTF) which was Unchanged for the week ending July 15th, is DOWN 24.0% since the end of May and remains Unchanged in price YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 7.9%
     • Altman Z-Score: 2 (42% chance of financial distress in the next 2 years)
     • Piotroski F Score: 5
     • Return on Equity (ROE): 40%
     • Return on Assets (ROA): 7%
6. Anheuser-Busch (BUD) was DOWN 1.7% for the week ending July 15th, is DOWN 3.7% since the end of May, and is now DOWN 9.9% YTD and has a Dividend Yield of 4.6%..
   • The company has a $100 million joint venture with Tilray Inc. (TLRY) which was DOWN 3.5% for the week ending July 15th, is DOWN 28.1% since the end of May and is now DOWN 53.1% YTD and pays out no dividend.
     • Positive Operating Cash Flow: Yes
     • Price-to Earnings (P/E) Ratio: 24.3%
     • Altman Z-Score: 1 (45% chance of financial distress in the next 2 years)
     • Piotroski F Score: 6
     • Return on Equity (ROE): 7%
     • Return on Assets (ROA): 4%

In summary, the Conservative Cannabis Stocks Index was UP 1.3% for the week ending July 15th, is DOWN 3.6% since the end of May, and is now DOWN 0.4% YTD with an average Dividend Yield of 3.1%.

Hopefully the above information will help you assess the financial health of each company, how well the company is being managed and the extent to which the company is over- or under-valued compared to its peers.

Definitions:

Operating Cash Flow:

• Is money involved directly with the production and sale of goods from ordinary operations or, in other words, money coming in through sales minus operating expenses.
• Without positive operating cash flow a business doesn’t survive and, as such, is the best measure of a company’s financial and operational health.

Price/Earnings (P/E) Ratio:

• Is a measure a company's share price to its earnings per share and has the most value when compared against similar companies in the same industry or for a single company across a period of time.
• Helps one determine whether a stock is overvalued (a high P/E) or undervalued (a low P/E) and can also be benchmarked against other stocks in the same industry or against the broader market.

The Altman-Z Score:

• Is a numerical measurement used to predict the chances of a business going bankrupt in the next two years and has an accuracy that ranges from 82% and 94%.
• Is based on five financial ratios - profitability, leverage, liquidity, solvency, and activity. 

The Piotroski F Score:

• Is a back-tested strategy that rates how strong the financial fundamentals are for a value stock and in back-testing of the system against the market between 1976 and 1996 the system it would have beaten the average return on the stock market by 13.4%.
• A score of 0-3 indicates that the company has weak fundamentals while a score of 8-9 indicates a company with powerful fundamentals that are most likely to keep performing well in the future.

Return on Equity (ROE)

• Is a measure of how many dollars of profit are generated as a percentage of each dollar of shareholder's equity and, as such, is a metric of how well the company utilizes its equity to generate profits.
• The higher the ROE, the better a company is at converting its equity financing into profits.

Return on Assets (ROA)

• Is a measure that indicates how profitable a company's net income is as a percentage of its total assets and, as such, factors in a company's debt while return on equity does not.
• A higher ROA means a company is more efficient and productive at managing its balance sheet to generate profits while a lower ROA indicates there is room for improvement.

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