U.S. home sales are again showing weakness.

However, it may only be a temporary issue.

The fact that home sales fell in December 2018 to their weakest levels in three years is rattling quite a few investors.  Some, including Sam Khater, chief economist at Freddie Mac believes we’re in a “mental recession.”

“Looking ahead to 2019, expect weaker existing-homes sales as the new year ushers in a government shutdown and worsening economic uncertainty,” said Cheryl Young, a senior economist at Trulia, as quoted by Time.

However, there is some potentially good news to look forward to with housing.

One, we may soon begin to see a decrease in market volatility, as volatility and tensions over the U.S.-China trade war begin to show signs of abating.

Two, the Federal Reserve may not be as aggressive with its rate hikes as previously thought.  In fact, it has noted it would be patient when it comes to doing so.

And three, once the partial government shutdown is over, we could see an increasing in housing transactions.  According to NAR President John Smaby, “Once the government is fully reopened, I am hopeful that housing transactions will increase.”

At the moment, it’s a wait-and-see with a volatile market.  

Even with some slowing growth, there are plenty of opportunities to be found.


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Opportunity No. 1 – CannTrust Holdings (CNTTF)

One of the most exciting stories for investors has been the push by marijuana stocks to list of major U.S. exchanges in the U.S. and abroad.

By doing so, cannabis companies draw bigger investors, including institutional investors that aren’t often able to invest in OTC-listed stocks.  While there’s nothing wrong with listing on the OTC, a major exchange offers a bigger audience of potential investors, and Wall Street firms.

Cronos Group Inc. (CRON), for example became the first marijuana company to list on the NASDAQ in early 2018.  “It’s very significant for the company and the whole industry,” said Mike Gorenstein, Cronos founder and chief executive officer, as quoted by Bloomberg. “It’s a huge moment — just shows the stigma is continuing to erode on cannabis.”

Aurora Cannabis Inc. (ACB) – one of the biggest Canadian marijuana stocks – debuted on the New York Stock Exchange in October 2018.  While the stock hasn’t done very well since it listed on a major exchange, investors are still encouraged by the company.

Canopy Growth (CGC) listed on the NYSE in 2018, and has since rallied from $30 to $43 a share.  Making the stock even more attractive, alcohol heavyweights like Constellation Brands invested more than $4 billion in the company.

Another one to keep an eye on is CannTrust Holdings (CNTTF) – which has applied to list its shares on the NYSE.  “CannTrust has firmly established itself as one of the top licensed producers in Canada with a global platform rooted in trust, science and innovation,” CEO Peter Aceto said. “A listing on the NYSE is a natural step forward in our evolution as we look to broaden our investor base, increase the company’s exposure and expand our business on an international scale.”

Opportunity No. 2 – Vipshop Holdings Ltd. (VIPS)

VIPS operates as an online discount retailer for various brands in the People’s Republic of China.  It’s one of many Chinese stocks that took a vicious beating, but is likely to recover on potential de-escalation of trade war tensions.  

The good news — China just offered to go on a six-year buying spree of U.S. goods to help rebalance trade between the two economic superpowers.  

According to Bloomberg, “By increasing goods imports from the U.S. by a combined value of more than $1 trillion over that period, China would seek to reduce its trade surplus — which last year stood at $323 billion — to zero by 2024.”  The latest developments come on the heels of a report that U.S. officials are debating lower tariffs on Chinese goods to incentivize Beijing to make deep concessions.

Opportunity No. 3 – Square (SQ)

SQ remains our top pick for 2019.  It’s already recovered from a low of $54 to $70 a share.

Technically and fundamentally, the stock appears to be in great shape.  Granted, last year wasn’t it’s finest and we were knocked out of a previous trade, but it’s got a lot going for it. For one, third quarter revenue was up 51% year over year.  Adjusted revenue was up 68%. That’s up from growth rates of 48% and 60% in the second quarter.