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

Fine, you may say. Hubzu.com and homesearch.com 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. Priceline.com (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 hubzu.com 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

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 17,082.76 +31.03 0.18%
S&P 500 1,977.75 +4.12 0.21%
NASDAQ 4,445.75 +21.0460 0.48%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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