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On December 20th, the Commerce Department released data showing that housing prices remain high, renter demand is still strong, and the supply and demand imbalance appears to show no relief.
These economic data points indicate that the housing crash, or pull-back many expected to see with housing prices in 2023, may not be coming.
Let’s look at the numbers and then explain why a housing crash doesn’t appear to be on the horizon in 2023.
The December housing numbers showed US single-family homebuilding dropped to a two-and-a-half-year low in November 2022. Permits also fell in November by 7.1% for single-family homes and 11.2% for overall building permits. Overall housing ‘starts’ dropped 0.5% in November, with single-family starts falling 4.1% and multi-family units up 4.8%.
So essentially, we are seeing that construction of new single-family homes is slowing when we are already in a tight supply-demand situation with those types of units. This supply shortfall comes from data showing that from June 2012 to 2021, the US had 12.3 million new households formed, but only 7 million new single-family homes were built.

The pandemic played a role in making this shortfall wider, as it is estimated that in 2019 the US was only short 3.84 million units. But, labor shortages before the pandemic started, which worsened during the pandemic, and costs of materials and land, all pushed housing prices higher.
Higher housing prices make it harder for more people to afford a home. Thus, fewer homes get built. High housing prices were likely one reason we didn’t see more homes built in 2021. In 2022, the main reason was increasing interest rates. Again, higher interest rates push the overall cost of ownership higher, resulting in fewer people building homes.
Another interesting data point from December was the Homebuilders’ confidence levels also plummeted in December for a record 12th month straight. This data point only adds to the idea that single-family homes will continue to be underbuilt in the near future.
Remember, there are two sides to the equation of new home builds. First, the consumer decides they want a new home built and hires a contractor to build the house ‘custom’. The other way is a build track style homebuilder, which builds a bunch of homes in anticipation of consumers wanting to buy a new home.
If the home builders are confident they can sell what they build, they build before they have buyers. If their confidence is low, as it is now, they wait until they have a buyer who has already put money down before they build.
This matters because if the big home builders built up inventory now, while sales were slow, we could see that 5 million home shortfall begin to shrink. But if they don’t build above the last ten-year average rate, how will we claw back some of that supply shortfall?
With all of that said, my takeaway from the December housing numbers is this; in 2023, we will not see a massive drop in housing prices. Yes, we may continue to see low demand because interest rates are high, but prices will not take an enormous hit. Low supply and high costs of materials will keep housing prices at or near current levels in most US markets.
So as an investor, here are a few Exchange Traded Funds that you can buy and hold for the next few years as we watch the housing market work through these interesting times.
The first is the Residential REIT Income ETF (HAUS). HAUS buys REITS that generate 75% of their revenue from multi-family or single-family rental housing or at least 50% from senior living housing. HAUS does have a high expense ratio of 0.60%, but considering it is an actively managed fund offering exposure to roughly 25 different REITS, that is not a terrible price.

Another ETF option similar to HAUS is the Kelly Residential & Apartment Real Estate ETF (RESI). It has an expense ratio of 0.68% and focuses on the residential and apartment real estate sector. However, unlike HAUS, which is focused on US-based companies, RESI focuses on any company operating in developed countries. RESI’s goal is to have a portfolio of roughly 60 companies. A little more than double HAUS.
Another option is something like the Hoya Capital Housing ETF (HOMZ). HOMZ tracks a tier-weighted index of the top 100 equities representing the US residential housing industry. The fund is built on four segments; 1) home ownership and rental operations, 2) home building and construction, 3) home improvement and furnishings, and 4) home financing, technology & services. HOMZ is much broader than the other two but also focuses slightly less on the residential and rental portion of the housing industry, and more on the other business’s that benefit from increased supply.
As an investor, you need to remember that predictions that the housing market will stay strong in 2023 and prices will not dip dramatically are just predictions and could be wrong. But I still believe investing some money in this sector is a wise move over the long run, even if 2023 doesn’t play out the way I think it could.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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It’s been a rough year for the major market averages, with the major indexes down roughly 20% in their worst year since 2008.
This poor performance is not surprising after a decade-long bull market that pushed valuations to historic extremes combined with an ultra-hawkish Federal Reserve that has aggressively hiked rates into a recessionary environment.
At the same time that higher rates have dented earnings and resulted in layoffs due to increased interest expense, the outlook for forward earnings is less clear, with consumer spending pulling back and reduced sales leverage for most corporations.
However, one sector stands out and has been trending higher over the past two months: the gold mining sector. In fact, the Gold Miners Index (GDX) has clawed back from a 30% year-to-date loss to just a 13% year-to-date loss, and many gold miners are trading in positive territory year-to-date.

Given that they’ve suffered through a much larger bear market than the Nasdaq (COMPQ) with a ~55% decline, these names are not only undervalued, but they’re long-term oversold, and the sector could have meaningful upside as we head into a strong seasonal period for the GDX.
In this update, we’ll look at two of the more undervalued names in the sector:
Osisko Gold Royalties (OR)
Osisko Gold Royalties (OR) is a $2.23 billion company in the precious metals royalty/streaming space.
This means that It finances developers, producers, and explorers in the commodity sector with a gold/silver focus, providing them capital upfront to build or expand their assets.
In exchange, Osisko Gold Royalties receives either a royalty or stream on the asset over its mine life, with the latter giving it a right to buy a percentage of metal produced at a fixed cost that is well below spot prices.
The result is that royalty/streaming companies have their tentacles in several projects, have their revenue streams spread across several countries, and are inflation-resistant. Hence, they are superior businesses from a margin and risk standpoint vs. most gold producers.
So, what’s so special about Osisko?
While Osisko may not be the largest royalty/streaming company in the sector, it stands out for three reasons.
For starters, it generates most of its revenue from royalties and streams in Tier-1 jurisdictions, a clear differentiator from its peers, making it more attractive from a geopolitical standpoint.
Secondly, Osisko is partnered with some of the largest operators in the sector on its projects, including Agnico Eagle (AEM), Newmont (NEM), and Alamos (AGI).
Not only does this mean that more meters are drilled on its properties which provides Osisko with a potential upside above its initial investment, but it also means that these mines are managed by highly skilled operators capable of maintaining and growing production without issues.
The final point and most important is that Osisko has a very deep pipeline of development assets and one of the best growth profiles sector-wide. This includes the potential to grow production from 90,000 gold-equivalent ounces [GEOs] in FY2022 to 140,000 GEOs in 2026 and up to 200,000 GEOs in 2030.
The latter represents an industry-leading 10.5% compound annual production growth rate which dwarfs the low single-digit production growth rate for larger royalty/streaming peers in the sector.
However, this growth assumes that Osisko doesn’t aggressively acquire new royalties/streams, which is certainly possible with over $600MM in liquidity currently.
Based on what I believe to be a fair cash flow multiple of 25.0 and FY2023 cash flow per share estimates of $0.74, I see a fair value for OR of $18.50, representing a 51% upside from current levels.
Tthese cash flow estimates assume that gold remains below $1,875/oz next year and silver remains below $23.00/oz, with these forecasts looking beatable based on spot prices today.
To summarize, OR is the most attractive royalty/streaming company sector-wide from a growth, quality, and value standpoint, and I am bullish at $12.00, where a large margin of safety is baked into the stock.
Barrick Gold (GOLD)
Barrick Gold (GOLD) is the world’s 2nd largest gold producer and sports a market cap of $30.8BB at a current share price of $17.50.
Despite its distinction as the #2 gold producer globally, Barrick has underperformed its peers and suffered a more than 45% decline from its 2020 highs despite a mere 14% decline in the gold price.
This underperformance can be attributed to the fact that Barrick’s operating costs have risen due to inflation, its production has been lower over the past three years as it’s made divestments, and it saw one asset go offline (Porgera), leading to a further decline in its global gold production (~4.2 million ounces per annum).
The combination of higher costs, a lower gold price, and declining production has put a major dent in annual EPS and cash flow per share, with Barrick on track to see its annual EPS decline from $1.15 in FY2020 to $0.81 this year.
While this is disappointing, it’s important to note that production is expected to increase materially, looking out to 2024 with its new Goldrush Mine, increased production at Turquoise Ridge and Pueblo Viejo, and a Porgera restart.
Simultaneously, its costs are also expected to decline materially with the benefit of some moderation in inflationary pressures, the optimization of key assets, and much lower sustaining capital after a year of elevated waste-stripping costs in 2022.
The result is that annual EPS will likely trough in 2022, rising above $1.00 in FY2024 assuming the gold price cooperates.
Given that we could be seeing peak operating costs and trough earnings/cash flow and the market is forward-looking, I believe it’s likely that Barrick has seen its lows at $13.00 per share and will likely trade in a range between $13.00 and $26.00 per share over the next 18 months.
So, while the stock is off its lows, I still see considerable upside left, and I would expect any sharp pullbacks to provide buying opportunities. This is supported by the fact that Barrick has historically traded at 25.0x earnings and currently trades at just ~17.5x FY2024 annual EPS estimates of $1.00.
Hence, even if we were to see it trade below this level (24x earnings), I see a fair value for its 18-month target price of $24.00.
So, why Barrick vs. other major producers?
Although Barrick may operate out of some less attractive jurisdictions (Papua New Guinea, Mali, Congo), its largest mining hub is in Nevada.
Notably, the company has a very bright future in the state with a joint venture completed to unlock significant resources and optimize these assets.

Ultimately, I see this leading to meaningful growth in its Nevada production profile post-2025, and with this being the #1 ranked jurisdiction globally, I would expect Barrick to continue to command a premium multiple.
This is reinforced by Barrick having a disciplined CEO and industry-leading diversification with over a dozen mines across multiple jurisdictions.
So, with the stock hated and on the sale rack, I would expect pullbacks below $16.40 to provide buying opportunities.
In a market where few stocks are making new 50-day highs, the gold sector is a clear exception, with several names like OR, GOLD, and AEM breaking out of bases.
Even more importantly, these bases have been built after two-year bear markets that have left these stocks with attractive valuations and considerable upside before they become overbought.
So, if I were looking to diversify my portfolio, I see OR and GOLD as solid buy-the-dip candidates.
Disclosure: I am long OR, AEM, GOLD, AGI
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing. Given the volatility in the precious metals sector, position sizing is critical, so when buying small-cap precious metals stocks, position sizes should be limited to 5% or less of one’s portfolio.

It has been a challenging year for the stock market as most equities have witnessed a sell-off due to various macroeconomic and geopolitical concerns.
However, retail energy and renewable energy solutions provider Genie Energy Ltd. (GNE) has gained 84.7% in price year-to-date and 90.6% over the past year to close the last trading session at $10.29.
The stock’s strong performance can be attributed to the rise in energy prices that led to strong earnings for the company.
Post its third-quarter earnings, GNE’s CEO Michael Stein, said, “We reported record third-quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business. GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA.”

Its Genie Renewables (GREW) segment also did well as it acquired site rights to 64MW solar projects and advanced them through its permitting processes.
“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia,” he added.
GNE is trading at a discount to its peers. In terms of trailing-12-month GAAP P/E, GNE’s 5.44x is 73.5% lower than the 20.53x industry average. Its trailing-12-month EV/S of 0.55x is 86.4% lower than the 4.05x industry average. Also, the stock’s 2.07x trailing-12-month EV/EBITDA is 84.4% lower than the 13.30x industry average.
On November 30, 2022, GNE announced the acquisition of a portfolio of residential and small commercial customer contracts from Mega Energy. GNE’s CEO Michael Stein said, “Our strong balance sheet, with significant cash reserves, positions us to compete for additional books of business at favorable prices. We will continue to look for customer acquisition opportunities as specific markets become more conducive to growth.”
The acquisition helps it acquire new customers across seven states in the Northeast and Midwest. The portfolio comprises approximately 11,000 residential and commercial customer meters, and it is expected to be revenue and earnings accretive for the company immediately.
For the rest of the year, Stein guided, “We expect energy prices to remain volatile as we head into the winter months, but we continue to be well-positioned from a risk management position and will return to customer acquisition mode on a market-by-market basis when the risk/reward balance is favorable.”
“Additionally, we expect to receive all approvals necessary to begin construction on our first wholly-owned and operated solar generation project this quarter. Finally, we continue to redeem our preferred stock to enhance our flexibility to invest future cash-flows in value creation initiatives, including pursuing additional growth opportunities in our renewable business,” he added.
Here’s what could influence GNE’s performance in the upcoming months:
Mixed Financials
GNE’s revenue declined 7.3% year-over-year to $81.28 million for the third quarter ended September 30, 2022.
Its adjusted EBITDA increased 35.4% year-over-year to $24.50 million. The company’s gross margin came in at 53.1%, compared to 39.5% in the prior-year period.
Also, its net income attributable to GNE common stockholders came in at $18.31 million, compared to a net loss attributable to GNE common stockholders of $2.66 million in the year-ago period.
High Profitability
In terms of the trailing-12-month gross profit margin, GNE’s 49.45% is 26.9% higher than the 38.98% industry average.
Likewise, its 26.20% trailing-12-month EBIT margin is 40.8% higher than the industry average of 18.61%. Furthermore, the stock’s 1.52% trailing-12-month asset turnover ratio is 552.6% higher than the industry average of 0.23%.
Technical Indicators Show Promise
According to MarketClub’s Trade Triangles, the long-term and short-term trends for GNE have been UP since December 14, 2022, and its intermediate-term trend has been UP since December 5, 2022.
Source: MarketClub
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.

In terms of the Chart Analysis Score, another MarketClub proprietary tool, GNE, scored +85 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating short-term weakness. However, look for the longer-term bullish trend to resume. As always, continue to monitor the trend score and utilize a stop order.

The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool takes into account intraday price action, new daily, weekly, and monthly highs and lows, and moving averages.
Click here to see the latest Score and Signals for GNE.
What’s Next for Genie Energy Ltd. (GNE)?
Remember, the markets move fast and things may quickly change for this stock. Our MarketClub members have access to entry and exit signals so they’ll know when the trend starts to reverse.
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Best,The MarketClub Team[email protected]