TSI Cannabis Quality Rating System

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To determine the investment quality rating for any cannabis producer, we weigh a range of factors in order to establish our Cannabis Quality Rating (CQR).

All told, we look at 13 factors in determining the quality rating of a marijuana stock:

13 QUALITY FACTORS

  1. Does this cannabis producer have rising revenue?
  2. Is its revenue stream significantly diversified?
  3. Is the company currently in production?
  4. Does the company have a sound balance sheet—cash and low debt?
  5. Does it have international operations?
  6. Industry prominence?
  7. Is the firm free from high dependence on a single customer?
  8. Does the cannabis producer have a prominent client list?
  9. Is its cost structure competitive?
  10. Is the stock’s market cap in line with the company’s sales (not an outsized market cap in relation to sales)?
  11. Is the company focused on organic growth rather than growth through acquisition?
  12. Has the stock’s price risen in line with the market average (not gone up faster than the market average)?
  13. Is the company outside of the broker media limelight?

Marijuana producers with most if not all of those factors earn a 5-Leaf Cannabis Quality Rating (CQR) for their sound investment quality and reasonable valuation compared to their current price and market cap.

Companies with many of these factors, receive a 4-Leaf or 4.5-Leaf CQR. That means they offer reasonable investment quality, but are somewhat overvalued at their current price and market cap.

Companies with a 3-Leaf or 3.5-Leaf CQR have a few of those key factors, which suggests they have reasonable investment quality. Still, they are likely overvalued at the current price and market cap.

Companies with a 2-Leaf or 2.5-Leaf CQR have a number of investment flaws and are very likely overvalued at the current price and market cap.

Companies with a 1-Leaf or 1.5-Leaf CQR have little investment quality and are almost certainly overvalued at the current price and market cap

Note: Even a 5-Leaf CQR is not the same as a BUY recommendation. In a new market where production is just now ramping up and both demand and supply are uncertain, most of these stocks lack fundamental value. Plus, most move up or down on the latest swings in investor interest and momentum regardless of their individual quality rating.  

Comments

  • I’m looking for a list of cannabis stocks with your leaf rating beside each one. Similar to what you do with the stocks in your S.I. portfolios

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