Sunday , 3 July 2022

3 Of 5 Marijuana Categories Went UP Last Week

The cannabis sector consists of 5 distinct categories and they each performed quite differently from each other during the fourth week of May.

By Lorimer Wilson, Managing Editor of munKNEE.com and a frequent contributor to eResearch.com, usfinancepost.com, bitgrum.com and talkmarkets.com.

Below are the 5 categories that are tracked by my proprietary indices, the constituents in each index with their low/average/high market capitalizations and low/average/high stock price performances, and each category’s average stock performance during the fourth week of May, YTD and from their peaks in 2021:

  1. The Pure-Play Canadian LP Pot Stock Index

    • The Index consists of the 5 largest Canadian Licensed Producers, namely, Aurora (ACB); Canopy Growth  (CGC);  Cronos   (CRON); Organigram  (OGI) and Tilray (TLRY) which trade for at least US$1/share on the Canadian and/or American stock exchanges and have a market cap in excess of US$350M.
      • The market capitalization of the above stocks ranged from a low of US$364M (Organigram) to a high of US$2,030M (Tilray) with an average of US$1,175M.
      • The stock prices ranged from US$1.16 (Organigram) to US$4.88 (Canopy) with an average of US$3.06/share.
    •  The Index went DOWN 13.8% during the fourth week of May and is now DOWN 42.9% YTD and DOWN 90.2% from its peak in February 2021. 
  2. The Pure-Play American MSO Pot Stock Index

    • The Index consists of the 13 largest American Multi-State Operators, namely, Acreage (ACRDF/ACRHF); Ascend Wellness  (AAWH); Ayr Wellness (AYRWF); Columbia Care (CCHWF); Cresco  (CRLBF); Curaleaf (CURLF); Goodness Growth  (GDNSF); Green Thumb (GTBIF); Jushi (JUSHF); Planet 13 (PLNHF);  TerrAscend  (TRSSF); Trulieve  (TCNNF) and  Verano (VRNOF) which trade for at least US$1/share on the Canadian and/or American stock exchanges and have a market cap of at least US$190M.
      • The market capitalization of the above stocks ranged from a low of US$190M (Goodness Growth) to a high of US$4,320M (Curaleaf) with an average of US$1,260M.
      • The stock prices ranged from a low of US$1.48 (Goodness Growth) to US$14.50 (Trulieve) with an average of US$4.99/share.
    • The Index went DOWN 5.7% during the fourth week of May and is now DOWN 45.2% YTD and DOWN 74.7% from its peak in February 2021.
  3. The Ancillary Pot Stock Index

    • The Index consists of the 7 largest companies providing goods and services to the cannabis sector, namely, AFC Gamma (AFCG);  Forian (FORA); GrowGeneration (GRWG); Hydrofarm (HYFM);  Innovative Industrial Properties (IIPR); Scotts Miracle-Gro Company (SMG) and Turning Point Brands (TPB) which trade for at least US$3/share on the Canadian and/or American stock exchanges and have a market cap of at least US$100M.
      • The market capitalization of the 4 smallest above stocks ranged from a low of US$110M (Forian) to a high of $525M (Turning Point) and averaged $327M. The other two stocks had an average market capitalization of US$4,530M.
      • The stock prices ranged from a low of US$3.36 (Forian) to US$133.09 (Innovative).
    •  The Index went UP 3.9% during the fourth week of May and is now DOWN 45.4% YTD and DOWN 63.5% from its peak in 2021. 
  4. The Conservative Pot Stocks Index

    • The Index consists of 6 tobacco, beer and liquor companies that have invested heavily in the cannabis industry, namely, Altria Group (MO); Anheuser-Busch (BUD); British American Tobacco  (BTI); Constellation Brands (STZ); Imperial Brands  (IMBBY) and  Molson Coors Brewing Company (TAP).
      • The market capitalization of the above stocks ranged from a low of US$11,960B (Molson Coors) to a high of US$101,630B (British American) with an average of US$63,010B.
      • The stock prices ranged from a low of US$22.83 (Imperial Brands) to US$246.31 (Constellation) with an average of US$80.03/share
      • All 6 constituents pay dividends with yields ranging from just 0.09% for Anheuser Busch to 6.61% for British American and Altria.
    • The Index went UP 5.1% during the fourth week of May, and is now UP 3.3% YTD but DOWN 4.4% from its peak in 2021.
  5. The Pure-Play Psychedelic Compounds-Based Stocks Index 

    • The Index consists of 6 psychedelic and marijuana (THC) drug companies in the clinical stages of research and development of treatments for a wide variety of mental illnesses, namely, Allied (ALID); Cybin (CYBN); Field Trip  (FTRP);  Numinus  (NUMIF); Seelos (SEEL) and Zynerba (ZYNE) which trade on the Canadian and/or American stock exchanges and have market caps of at least US$60M.
      • The market capitalization of the above stocks ranged from a low of US$42.5M (Zynerba) to a high of US$106.3M (Cybin) with an average of US$65.5M.
      • The stock prices ranged from a low of US$0.29 (Numinus) to US$0.98 (Zynerba) with an average of  US$0.69/share.
    • The Index went UP 1.0% during the fourth week of May, and is now DOWN 60.1% YTD and DOWN 85.4% from its peak in 2021. 

Four other companies with market caps in excess of US$400M are followed but are not included in the Index due to their size, namely, Atai  (ATAI); Compass Pathways (CMPS); GH Resources (GHRS) and Mind Medicine  (MNMD).

  • The market capitalization of the above stocks ranged from a low of US$320M (Compass Pathway) to a high of US$580M (Atai) with an average of US$437M.
    • The stock prices ranged from a low of US$0.87 (Mind Medicine) to US$9.62 (GH Resources) with an average of US$5.74/share.
    •  These 4 stocks went UP 0.9% during the fourth week of May, and are now collectively DOWN 57.8% YTD and DOWN 77.4% from their peak in 2021. 

In Summary

Below is a summary as to how the 5 cannabis categories performed during the third week of May, YTD, and from their peaks in 2021, in descending order:

  1. The Conservative Pot Stocks Index
    • went UP 5.1% during the fourth week of May, and is now
    • UP 3.3% YTD but is still
    • DOWN 4.4% from its peak in 2021.
  2. The Ancillary Pot Stock Index
    • went UP 3.9% during the fourth week of May, and is now
    • DOWN 45.4% YTD and
    • DOWN 63.5% from its peak in 2021.
  3. The Pure-Play Psychedelic Compounds-Based Stocks Index 
    • went UP 1.0% during the fourth week of May, and is now
    • DOWN 60.1% YTD and
    • DOWN 85.4% from its peak in 2021.
  4. The Pure-Play American MSO Pot Stock Index
    • went DOWN 5.7% during the fourth week of May, and is now
    • DOWN 45.2% YTD and
    • DOWN 74.7% from its peak in February 2021.
  5. The Pure-Play Canadian LP Pot Stock Index
    • went DOWN 13.8% during the fourth week of Mayand is now
    • DOWN 42.9% YTD and
    • DOWN 90.2% from its peak in February 2021.

Having the cannabis sector analyzed in such a fashion highlights the disparity between the 5 categories and, I hope, provides you with the information necessary to decide which, if any, category to invest in.

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