For the trading week that ended November 11, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 13.3% compared to the prior week when it increased by 3.2%. 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 7 stocks that increased by more than 10%, which is my metric for inclusion in this category CGC +31.5%, RDDTF +25.4%, MEDIF +23.2%, ACB +18.1%, VLNS +12.6%, ROMJF +11.5%, and CRON +10.5%. On 11/9/22 Canopy Growth Corporation reported a positive gross margin for Q2 and the market responded by increasing the company’s market capitalization to over $2B. Although this material increase was achieved with a much higher volume than the 90-day average, I am not convinced that CGC can sustain this momentum going forward. But it appears to me that increased option activity is likely.
 

The Bad

There were no stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category.

 

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 an increase of 14.8% in the “Big Four” (all of which increased) compared to the prior week when there was an increase of 3.5%. CGC was the #1 gainer. However, the 10.5 increase of CRON- a stock that has decreased 45.8% since my bearish article of 3/25/20 – and the resolution of accounting fraud charges prompted me to become bullish on the company. 

 

Recap

13 of the 22 stocks in the MCCCI increased. But more significant was that 8 of the 10 highest capitalization stocks rose, a bullish indicator. There was no change in the relative strength index compared to the prior week when there was a decrease of 4.9%. Let us see how this volatile sector has performed at the same time next week, shall we?

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