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The 5 constituents in munKNEE's Canadian Cannabis LPs Index were down 1.7% last week after having gone up 12,5% the previous week and down 3.9% the week before that. The volatility continues!

Below are the performances of the constituents in the Index last week, in descending order, and for the previous week along with each stock's forward-price-to-sales ratio (PSR), and enterprise value-to-earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio to provide a comparative valuation of each, where applicable, plus the latest news on each company. A definition of each ratio is at the end of the article.

Canadian Cannabis LPs Index

1. Cronos Group (CRON): up 10.8% last week; up 8.1% the previous week
   • Forward Price-to-Sales Ratio (PSR): 9.1 (High - above the sector mean of 3.4)
   • EV/EBITDA ratio: Negative
   • Latest News: Cronos Q3 Financial Results Are Impressive
2. Organigram Holdings (OGI): up 6.0% last week; up 16.0% the previous week
   • Forward Price-to-Sales Ratio (PSR): 1.0
   • EV/EBITDA ratio: 9.9
   • Latest News: Organigram Announces C$124.6 Million Investment from BAT and Creation of "Jupiter" Strategic Investment Pool
3. Aurora Cannabis (ACB): down 4.1% last week; up 11.4% the previous week
   • Forward Price-to-Sales Ratio (PSR): 1.1
   • EV/EBITDA ratio: 24.5 (High - sector mean is 12.4)
   • Latest News: Aurora Cannabis' Q2 Net Income Was Positive For The First Time
4. Tilray Brands (TLRY): down 12.6% last week; up 11.7% the previous week
   • Forward Price-to-Sales Ratio (PSR): 1.5
   • EV/EBITDA ratio: 19.5 (High - sector mean is 12.4)
   • Latest News: Tilray Launches 'Get Blitzen’d' Holiday Campaign and New Limited-Edition Products Across Canada
5. Canopy Growth (CGC): down 17.5% last week; up 23.5% the previous week
   • Forward Price-to-Sales Ratio (PSR): 1.8
   • EV/EBITDA ratio: Negative
   • Latest News: Canopy Growth Q2 Financials Show Improvement

LP Stock Performance Summary

Index Average: down 1.7% last week, up 12.5% the previous week and now down 47.3% YTD.

Understanding Valuation Metrics 

To evaluate these companies, investors often look at these key ratios, among others:

• The price-to-sales ratio (PSR) indicates the price paid for a share relative to the revenue that share generates, helping assess if a stock is valued appropriately. The mean forward PSR for the EDA Software Sector is 2.5 and is considered excellent when the value falls below two (2). The mean forward PSR for the Health Care/Pharmaceuticals sector is 3.4.
• The Enterprise Value-to-Earnings Before Interest, Taxes, Depreciation, and Amortization ratio (EV/EBITDA) ratio considers a company's total value, including debt and equity, relative to its earnings before interest, taxes, depreciation, and amortization, giving investors insight into profitability across companies. A high means the company is overvalued, while a low ratio indicates it’s undervalued. The mean forward EV/EBITDA ratio for the Health Care/Pharmaceuticals sector is 12.4.

These metrics are essential for investors to understand the financial health and potential of companies in comparison to each other within the Health Care/Pharmaceuticals sector.

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