The US authorities have what is called the “Exuberance” index for the global housing market. It is when a housing market reaches levels that exceed the norm enough to be considered exuberant. The results are shared quarterly and Canadian real estate has become “exuberant” for five consecutive quarters. It’s a bubble.
And if we go back further, the Canadian market has been exuberant for a very long time, at least six years. Now, there is only a quarter between the current exuberant five-month bubble and the mad market that preceded it. This created an effect that some experts call a double bubble, that is, a new bubble that forms over the old one that has been exploding for six years.
If we rule out this quarter it can be seen as a giant bubble that has been brewing for six years. But it doesn’t matter whether it’s a double bubble or a colossal bubble; the size-related correction will either be abrupt or in the relatively long term to bring prices back to reality. And if it’s something you want to protect your portfolio from, two stocks should be on your radar.
A real estate services company
Real estate, even the residential segment, isn’t just about buying and selling properties. There is a lot of activity outraged usual transactions, and that is why investing in a company As PremierService (TSX: FSV) (NASDAQ: FSV) might not be a bad idea when trying to protect yourself from real estate fallout. Another reason is the FirstService footprint, which is significantly more robust in the United States than in the country.
And although the company has recently joined the ranks of the aristocrats, it is the potential for capital growth it offers that has the potential to attract investors. Its five-year CAGR of 33%, increased by the regularity of growth, makes it an ideal growth stock. This level of growth, however, usually comes with a high price tag, and FirstService is no exception.
A commercial REIT
Another way to avoid a looming “housing crisis” is to invest in commercial real estate – ideally real estate with a international footprint, and FPI Granite (TSX: GRT.UN) offers this powerful combo. Granite mainly focuses on light industrial properties (logistics, warehouses, etc.) and a significant portion of its revenue comes from e-commerce activities.
This is another factor that confirms Granite’s growth potential. The REIT has a proven track record in the area of growth and even dividends. Its 10-year CAGR is 18.4% and it is currently undervalued. It also offers an attractive yield of 3.1% and payouts are expected to rise in the future since the REIT is an aristocrat.
Granite and FirstService are strong growth stocks. Due to the nature of their business and their footprint, both are relatively safe, although housing stock market crashes. They may experience a drop, but that may not be a bad thing. This will allow you to buy them for an even better price than what you can get at the moment.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Adam othman has no position in any of the stocks mentioned. The Motley Fool recommends FirstService Corporation, SV and GRANITE REAL ESTATE INVESTMENT TRUST.