Four Trades to Consider This Week

Big news made it to my desk at the end of last week. Republican congresswoman Nancy Mace is spearheading a new marijuana legalization bill.

A Republican backed legalization effort would be incredible for cannabis stocks across the board, so I’ve been monitoring the markets since last Thursday’s announcements for profitable targets.

The bill reportedly seeks to treat cannabis similarly to alcohol: legalize and impose relatively low excise taxes and marijuana sales. This would put wind in the sails of almost all pot stocks, but Tilray Inc (TLRY) and Aurora Cannabis Inc (ACB) are the two that have caught my eye.

Shares of TLRY and ACB jumped as much as 22.15% and 22.82%, respectively, in last week’s trading.

Neither of these companies are profitable right now and they’re not expected to become profitable anytime soon – but that won’t stop pot stock investors from pushing shares higher as Mace’s bill makes more headlines.

I want to see both of these stocks trade down near their respective 21-day moving averages before making move, so here’s what I want you to do…

If shares of TLRY trade down to $11.00 by the 30th, let’s buy the TLRY December 31, 2021 $11.50/$12 Call Spread for $0.20 or less. Plan on exiting the TLRY December 31, 2021 $11.50/$12 Call Spread at a 100% profit or if shares of TLRY close below $10.65.

If shares of ACB trade down to $7.15 by the same day, we should grab a position with ACB December 31, 2021 $7.50/$8 Call Spread for $0.20 or less. Plan on exiting the ACB December 31, 2021 $7.50/$8 Call Spread at a 100% profit or if shares of ACB close below $6.62.

Go-to Plays for Biden’s EV Bill

But that’s not the only thing I’m watching this week. Electric vehicles are back in the news.

The Biden Administration’s Infrastructure Investment and Jobs Act provides $7.5 billion in federal grants to build a national network of charging stations. That’s a good start, but it will likely take much more.

In 2020, there were about 216,000 charging stations in the United States, but The International Council on Clean Transportation, says the United States will need 2.4 million electric vehicle charging stations by 2030 if about 36% of new car sales were electric.

Based on those numbers, the United States will need to increase the number of charging stations by 1011% over the next decade.

That’s a huge tailwind for electric vehicle charging companies, and it’s already showing up in recent quarterly earnings for Blink Charging Company (BLNK) and EVgo Inc. (EVGO).

Thursday, after the close, Blink Charging Company (BLNK) reported third-quarter results that included record revenues in both product sales and service revenues.

According to the founder and CEO Michael Farkas, Blink has been awarded nearly $25 million in existing EV infrastructure grants, rebates, and incentives this year alone.

The stock jumped as high as 36.38% in last week’s trading, before giving back some ground in Friday’s session. I see it coming back down a little more before it resumes its trend upwards.

If shares of BLNK come back down to $34.50 by November 30, 2021, I like buying the BLNK December 31, 2021 $37/$38 Call Spread for $0.33 or less.

Based on that price, we’ll be risking $0.33 (our initial cost) to potentially walk away with a $0.67 profit when it expires.

That’s a great risk/reward profile.

Now EVgo Inc (EVGO) is a Los Angeles company operating a direct current fast-charging network for battery electric vehicles in the U.S.

Last Wednesday, it reported third-quarter results that included revenue of $6.2 million compared to $4.8 million for the second quarter of 2021, which represents 29% quarter-over-quarter growth. Network throughput has reached 8.0 GWh with 31% quarter-over-quarter growth. Total customer accounts grew to more than 310,000 at the end of the third-quarter of 2021.

Those are all good numbers but shares of EVGO jumped as much as 96.29% in last week’s trading.

I like the company and its prospects for the future. But nearly doubling in a week? That’s too much too fast.

With that said, I like trading EVGO for a quick profit-taking reversal.

I like buying the EVGO December 17, 2021 $16/$15 Put Spread for $0.50 or less. Plan on exiting the EVGO December 17, 2021 $16/$15 Put Spread trade for a 100% profit, or if shares of EVGO trade up to $19.60 or more.

Until next time,

— Shah

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Source: Total Wealth