The TSX Index closed up 2.52% for the week heading into Labour Day weekend — the second time that Canada’s leading benchmark index has closed in positive territory over the past five weeks.
However, despite a strong showing for the market overall, the companies that made this list didn’t fare quite so well.
Pot stocks across the board continue to slide — a development that may prove especially frustrating for those who were late to jump on the bandwagon.
Shares in Canada’s largest licensed cannabis producer, Canopy Growth Corp (TSX:WEED)(NYSE:CGC), sank by 5.10% for the week, while shares in Aphria Inc (TSX:APHA)(NYSE:APHA), Canada’s first licensed grower to record a quarterly net profit in the industry’s short history, were also down by 4.3% for the week despite gaining 16% in August on the back of strong fourth-quarter results.
Meanwhile, shares of OrganiGram Holdings Inc and Tilray Inc didn’t fare a whole lot better, losing 9% each, respectively, including a close to 30% drop in the value of OGI’s share price in August.
Within resources, Turquoise Hill Resources Ltd, and Birchcliff Energy Ltd. underperformed their peers, with each down 8% for the week despite the fact that rival competitors Teck Resources Ltd, Suncor Energy Inc. and Canadian Natural Resources Ltd each managed to post modest gains for their respective shareholders.
Trade talks between the U.S. and China continued in a mostly upbeat tone this week, yet ongoing uncertainty as to how developments between the U.S. and China will ultimately play out has continued to leave an overhang over investor confidence, impairing the ability of business leaders to plan and make investments for the future — something that can be particularly problematic for resource companies given where they sit on the supply chain.
However, while things have been bad for many resource stocks, rising geopolitical tensions have arguably been a boon for rising gold prices, helping to lift the sector in recent months.
Despite this, several gold producers found themselves in red last week, including New Gold Inc, (TSX:NGD) Sandstorm Gold Ltd, and Alamos Gold Inc, with each posting losses in the low-to-mid single digits for the week.
What does it mean for investors looking ahead?
Although the marijuana sector continues to exhibit weakness, Canopy Growth and Aphria warrant special attention among cannabis investors — the former because of its size and potential for economies of scale and the latter because of its reputation for being able to operate profitably even on a smaller scale.
New Gold is also interesting because despite being down just shy of 7% for the week, its shares are up 17% for the quarter and 41% year-to-date, which could suggest that last week’s selling was more about profit-taking than anything else.
Meanwhile, TRQ shares trade for less than $1 per share and BIR stock has grossly underperformed its energy peer group this year.
In light of the ongoing trade tensions and relative investor uncertainty, readers may want to consider paying up for quality within the resource sector for the time being.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Jason Phillips has no position in any of the stocks mentioned.