Image source

For the trading week ended February 26, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 12.2% compared to the prior week when it increased by 1.4%. The index consists of 25 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. 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.

The Good

There were no stocks that increased by more than 10%, which is my metric for inclusion in this category.

The Bad

There were 15 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: VVCIF -20.4%, NEPT -19.4%, ALEAF -18.3%, ZBISF -18.0%, TGODF -16.4% FLWPF -15.3%, CGC -15.2%, CRON -15.0%, OGI -13.9%, ACB -13.8%, HEXO -13.3%, SPRWF -12.8%, APHA -11.9%, VRNDF -11.1%, and EMHFT -10.4%.

The Ugly

There were no stocks that decreased by 20% or more, which is my metric for inclusion in this category. Valuation Metric Review There was a decrease of 13.0% in the “Big Four” compared to last week when there was an increase of 1.7%. Canopy Growth Corporation, which is by far the largest capitalization in the MCCCI, has decreased 4 weeks in a row and continues to weigh down the MCCCI. I have advised my private clients that CGC is now on my “watch list” based on its recent weak trading pattern.

Recap

There was a decrease of 11.2% in the relative strength index compared to last week when there was an increase of 8.1%. This result combined with the 2-week decline in the ratio of the top quintile stocks to the bottom quintile stock mirrors my 2021 thesis, which I will explain in more detail in next week’s report.

Let us see how this volatile sector has performed at the same time next week shall we? My new metric is in the final stage of development and I expect it to be operational by next week’s report.