This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

2 Zillow Rivals Hidden Inside Solidly Profitable Companies

NEW YORK (TheStreet) -- Even if you think online real estate companies like Zillow (Z), Trulia (TRLA) and Move (MOVE) hold great promise, the massive run-up in their shares ahead of any solid profits is a bit daunting.

By contrast, a couple of lesser-known rivals look remarkably cheap since they are buried inside other companies already churning out steady profits.

Many investors in Zillow, Trulia and Move are probably unfamiliar with Altisource Portfolio Solutions (ASPS) and Nationstar Mortgage Holdings (NSM). Indeed, many sell-side analysts who follow Zillow and Trulia probably haven't heard of them.

That's because Nationstar and Altisource are viewed by Wall Street as mortgage companies and are covered by analysts who follow the mortgage industry, while Zillow, Trulia and Move are seen as Internet companies and are followed by the same group of analysts who follow Facebook (FB), Google (GOOG)and LinkedIn (LNKD).

For the most part, that's appropriate, since the bulk of Nationstar's revenue comes from servicing mortgages. Altisource gets most of its revenue by providing administrative support to servicers of defaulted mortgages. It has close ties to largest customer, Ocwen Financial (OCN), the largest servicer of deliquent mortgages in the U.S.

However, both Nationstar and Altisource have online home auction platforms that could compete with Trulia and Zillow.

Altisource's platform, hubzu.com, looks to be much further along than Nationstar's homesearch.com. Hubzu 2012 revenue was $53.2 million, compared to $116 million for Zillow and $68 million for Trulia. They are comparable-sized businesses, in other words, except that Hubzu accounted for just over 9% of Altisource's $568 million in 2012 revenue. Hubzu has actually sold more than 75,000 homes on its site, more than 50% of which were bought by people who actually plan to live in the home. Zillow, which gets most of its revenue from advertising, cannot make such a claim.

Are investors valuing Hubzu the way they value Zillow or Trulia? Not remotely. All of Altisource, including Hubzu, has a market cap of 4.75 times its revenue over the past 12 months, according to Bloomberg data. By contrast, Zillow's market cap is 20.2 times trailing 12-month revenues and Trulia's is 14.81.

By this measure, Nationstar is the cheapest of all, with a market cap of just 2.49 times revenue. However, Nationstar only launched homesearch.com in May, and doesn't yet disclose any financial data about it.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,010.02 -29.47 -0.17%
S&P 500 1,991.66 -0.71 -0.04%
NASDAQ 4,534.4180 +2.3140 0.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs