Ancillary Cannabis Stocks Continue to Underperform With 4% Decline in February

Following up on our discussion in early 2021 about how cannabis investors have embraced publicly traded ancillary companies, New Cannabis Ventures launched its seventh proprietary index, the Ancillary Cannabis Index, at the end of March.

The index has significantly outpaced the overall market since the launch, but in January it fell substantially more than than the New Cannabis Ventures Global Cannabis Stock Index with a 16.5% decline. It extended this weakness in February, declining 4.1% to 51.48, worse than the 1.1% decline in the Global Cannabis Stock Index, leaving it down 19.9% from its close of 64.27 at the end of 2021:

The index has declined 48.5% since its introduction at the end of March 2021 compared to the decline of 54.7% in the Global Cannabis Stock Index:

The Ancillary Cannabis Index includes companies that provide goods and services to cannabis operators. Initially, each qualifying company was required to trade at a minimum of $0.50 per share with a minimum average daily trading value of $500K at the time the index is rebalanced each month. At the end of October, we raised the minimum average daily trading value to $1 million. Additionally, members of the index must generate at least $1 million per quarter from its ancillary operations.

During February, the index included 13 members, with 4 posting a gain and 2 declining by more than 20%, with a median return of -4.6%:

The three strongest stocks included WM Technology (NASDAQ: MAPS), Chicago Atlantic (NASDAQ: REFI) and Hydrofarm (NASDAQ: HYFM). WM Technology rallied following its Q4 financial report, which exceeded expectations for revenue. Chicago Atlantic is a recent IPO, and, after adding to its gains in January, is now up 21% in 2022. Hydrofarm was one of the weakest stocks in January.

The three weakest names during the month included iPower (NASDAQ: IPW), Power REIT (NYSE American: PW) and Scotts Miracle-Gro (NYSE: SMG) . iPower, an IPO from last year, has declined 37% this year and 70% from its IPO price. Power REIT extended its losses from January and is now down 30% in 2022 after a strong 2021. Scotts Miracle-Gro, one of the stronger names relative to peers in January, is now down 13% in 2022.

For March, we have removed NewLake Capital (OTC: NLCP) after it no longer met the minimum trading volume. We have also added CEA Industries (NASDAQ: CEAD) and Leafly (NASDAQ: LFLY), increasing the index to 14 members.

In the next monthly review, we will summarize the performance for March and discuss any additions or deletions. Be sure to bookmark the page to stay current on ancillary cannabis company stock price movements within the day or from day-to-day.

 

 

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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