For the (shortened) trading week ended May 31, 2024, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 3.6% compared to the prior week when it decreased by a de minimis 0.9%. The index consists of 14 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?
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The Good
There was 1 stock that increased by more than 10%, which is my metric for inclusion in this category: ROMJF+19.8%. Rubicon Organics Inc. Based on my review of the 5/16/24 earnings call transcript, it appears to me that the company believes that the yield and product quality benefits from the new tables installed at the Delta facility is a key element of margin improvement.
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 2 stocks that decreased by 20% or more, which is my metric for inclusion in this category: DLTNF -20.7% and CBWTF -20.4%. Delta 9 Cannabis Inc. is a $3.3M market capitalization stock which trades at $0.01. Auxly Cannabis Group Inc. was a “bad” stock in the prior 2 weeks.
Valuation Metric Review
There was a 3.6% decrease in the “Big 4” (all of which decreased) compared to the prior week when there was a 10.2% decrease. Canopy Growth Corporation (CGC) which I recently identified as an “optionable stock to watch” was the “biggest loser” in the cohort, and decreased 6.3%.
Recap
There was a 6.2% decrease in the relative strength index compared to the prior week when there was a 6.7% decrease. 1 of the 14 MCCCI stocks increased. Although the sector is generally bearish, In my view, Neptune Wellness Solutions Inc. (NEPT), Radient Technologies Inc. (RDDTF), and Delta 9 Cannabis Inc. (DLTNF) have 8 months or less to “get their act together” or face dissolution or a similar existential event. Let us see how this volatile sector has performed at the same time next week, shall we?More By This Author:The Canadian Cannabis Report – Monday, May 27
The Canadian Cannabis Report – Monday, May 20
The Canadian Cannabis Report – Monday, May 13
