If Senate Votes ‘No’ on Legal Cannabis, You Can Still Win with this Pot Stock Play

Shah Gilani|March 28, 2022

Big news for pot stock traders this week: legislation to legalize marijuana at the federal level is hitting the House floor as soon as next week.

News of the vote sent shares of popular pot stocks soaring, with Tilray Brands Inc. (TLRY), Canopy Growth Corporation (CGC), and Sundial Growers Inc. (SNDL) gaining more than 36%, 12%, and 47%, respectively, in last week’s trading.

I’ve long been in support of legalizing marijuana, but there’s a little more to the story than investors are considering.

The upcoming vote is on the MORE Act, which already passed in December 2020, so it’s expected to pass again. Once that happens, though, it moves to the Senate, where things start to look murkier.

There currently aren’t enough Senators on board to get to the 60 votes needed to pass a bill – and that could result in some serious headwinds for the recent pot-stock rally.

Get this TLRY play and two bonus trades courtesy of Shah’s watchlist.

At this point, any change in the narrative could temporarily drive shares of cannabis stocks lower. I think that makes for an interesting trade opportunity.

Let’s buy Tilray Brands Inc. (TLRY) May 20, 2022 $6/$5 Put Spread for $0.40 or less. Plan on selling the TLRY May 20, 2022 $6/$5 Put Spread for a 100% profit or if shares of TLRY close above $9.05.

Meta Platforms on the Rise

I’m also watching Meta Platforms (FB), the parent company of Facebook and Instagram.

After a round of negative press that drove shares 51% lower since September 2021, the stock is up nearly 20% over the last 10 sessions.

I think the recent rally is just the beginning – here’s why.

More than 2.9 billion people used its social networks each month during 2021, which resulted in the company generating $117.9 billion last year (2021).

The company boasts profit and operating margins of 33.35% and 39.65%, respectively.

It has a rock-solid balance sheet with $48 billion in cash and just $14.45 billion in debt.

Those are great numbers, and the stock’s valuation looks very attractive.

The company’s trailing 12-month PE ratio is just 15.5, which is less than half that of the Nasdaq 100 technology index, which trades at 32.

At this point, I like buying the FB May 20, 2022 $240/$245 Call Spread for $1.75 or less. Plan on selling the FB May 20, 2022 $240/$245 Call Spread for a 100% profit, or if shares of FB close below $200.00.

Cheniere Energy and Demand for Liquefied Natural Gas

And finally, I’m watching Cheniere Energy, Inc. (LNG), the Houston, Texas-based liquefied natural gas (LNG) infrastructure company.

The company is the largest producer of LNG in the United States and the second largest LNG operator in the world.

After Russia’s invasion of Ukraine, it’s become increasingly clear that European Union must reduce its reliance on Russian natural gas if they want to have any effective plan to protect its Eastern member-countries from further Russian incursions.

Any solution will involve offsetting Russian gas imports with imports with allied countries, such as the United States.

That could be a huge tailwind for Cheniere Energy!

At this point, let’s LNG May 20, 2022 $155/$160 Call Spread for $2.00 or less. Plan on exiting the LNG May 20, 2022 $155/$160 Call Spread position for a 100% profit or if shares of LNG close below $122.00.

That’s it for the watchlist, but I’ve got more in store for you today. At 8:30 a.m. (ET), I’m going live to answer reader questions and prepare you for the week to come.

Join me and fellow Total Wealth readers by click here and registering for the event.

Zoom will send you the link to the live room. I hope to see you there.

Cheers,

Shah Gilani