This Day On The Street
Continue to site
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

2 Zillow Rivals Hidden Inside Solidly Profitable Companies

Fine, you may say. and are cheap, but who has ever heard of them?

Fair point. My counterpoint is this: Nationstar is owned by Fortress Investment Group (FIG), one of the savviest and best-connected private-equity firms on the planet. Altisource is run by Bill Erbey, a billionaire who has made his fortune in the real estate business over more than three decades. If these people see a future in online residential real estate, they have plenty of access to capital to try and overtake the brand recognition of Zillow. Zillow spends about $30 million a year on advertising. That's peanuts for the executives behind Nationstar and Altisource.

Many investors scoff at Zillow and Trulia, pointing out that they are not yet consistently profitable. Short interest at Zillow accounts for 45.5% of the float, while at Trulia its 30.7%. Indeed, one approach would be to short those stocks and simultaneously go long Altisource Portfolio Solutions and Nationstar.

Despite the skepticism, however, many sell-side analysts believe profits are more or less assured for Zillow and Trulia.

"This is where the online travel industry was over a decade ago," said Telsey Advisory Group's James Cakmak.

No one disputes the viability of the online travel business any longer. (PCLN) earned $1.38 billion in the second quarter, up nearly 40% from a year earlier.

I happen to think Cakmak is right in arguing online real estate will have similar success. But I also think the race to determine who will lead this industry is a long way from decided. Laugh at if you like, but the chance to buy a legitimate Zillow competitor plus another business 10 times as large for a quarter of the price sounds like a pretty good deal to me.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
MOVE $20.95 0.00%
TRLA $48.36 3.14%
Z $98.26 0.00%
ASPS $23.24 0.00%
NSM $25.38 0.00%


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs