After twelve consecutive months of decline, Canadian licensed producers achieved their second-month growth in May.
The Canadian marijuana LP index rose 20.2% to 319.23, far exceeding the S & P / TSX Composite index: 2.8%.
In the past year, the index has fallen by 67.3%:
The index is still well below the September 2018 historical highest closing price of 1314.33 and reached its lowest level since the end of 2016 in March, a 52-week new closing low of 196.10. The closing price at the end of May was 62.8% higher than the index. The index fell 18.9% from the closing price of 393.78 at the end of 2019:
The index includes 35 publicly traded licensed producers traded in Canada at the end of March, with equal weights and readjusted monthly. Each member also involved in a sub-index. The Canadian Cannabis LP Tier 1 Index is 9, Canadian Cannabis LP Tier 2 Index is 8, Canadian Cannabis LP Tier 3 Index is 18. Please note that from the end of 2019, companies with prices below C$0.20 excluded unless they generate quarterly industry revenues over C$1 million. At present, there are nearly twenty unqualified public trading limited partners.
Tier 1 (which includes LP) generates cannabis-related sales of more than C$10 million per quarter (in 2018, we used 4 million Canadian dollars as an obstacle). It fell in April and rose 26.7% to 471.32% during the rebound month. It fell by 38.5% in 2019 and closed at 642.23 at the end of the year. The first quarter of this year has fallen by 26.6%, far worse than other tiers.
This group includes Aphria, Aurora Cannabis, Canopy Growth, HEXO Corp, MediPharm Labs, Organigram, Radient Technologies, Valens Company, and Zenabis Global.
Zenabis has more than doubled this month, but it has fallen by nearly 22% so far this year. HEXO led other Tier 1 members in May. MediPharmLabs is the only Tier 1 stock to drop this month, although Canopy Growth and Radiant have gained less than 10%.
Tier 2 includes limited partners with quarterly sales of between 2.5 million and 10 million Canadian dollars related to cannabis, an increase of 19.9% to 492.47. In 2019, the stock fell 44.3% after closing at $ 569.54 and fell 13.5% in 2020.
Including Aleafia Health, Cronos Group, Delta 9, Emerald Health, Heritage Cannabis, Supreme Cannabis, VIVO Cannabis, and WeedMD.
Emerald Health led the way with a 65% increase and will drop by about 14% by 2020. Aleafia, Health, Cronos Group, Heritage Cannabis, and VIVO Cannabis all increased by less than 10%.
Tier 3 (including 18 qualified LPs, with cannabis-related quarterly sales of less than C$2.5 million) led in April, but trailed in May, rising 17.0% to close at 81.97. The 2019 closing rate was 96.76, a decrease of 45.0%, and 15.3% in 2020. Four members of the group fell, but five rose by more than 35%.
The entire industry’s returns vary widely, with 18 companies showing double-digit (or triple-digit) revenue growth, while five companies have lost profits. The average rate of return is 11.0%, much lower than the average return rate of 20.2%:
There will be 38 constituent stocks in the June overall index, CanadaBis returns, and Lotus Ventures and NextLeaf Solutions join for the first time, all of which will be on Tier 3. Besides, Aleafia Health has moved from Tier 2 to Tier 1.
This article is issued by New Cannabis Ventures.