Overvalued Zillow; Energy Troubles: Cramer's Best Blogs

NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
  • the real estate website Zillow; and
  • the U.S. energy situation.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.


Zillow Is Overvalued

Posted at 11:44 a.m. EDT on Thursday, Aug. 29

You want power? You want strength? Take a look at Zillow ( Z), the heavily shorted real estate Web play that is soaring. The shares are up $6 on the day, and are now trading well above where the company priced its $82 secondary. Considering that the secondary was poorly received initially and broke price immediately, this is a remarkable renaissance. It's the only part of the housing-real estate sector that's doing well -- even as it is by far the most overvalued of all the stocks in the industry.

By contrast, Realogy ( RLGY), which represents 26% of all transactions, is barely up today even as it put on its best face on Mad Money last night and sales continue to grow at a 17% to 19% pace. Realogy's now a plus $3 billion company and all it does is list real estate. Despite Realogy's $5 billion in sales, the company is valued at about $6 billion and is barely up this year.

Zillow, with $150 million in revenues, is worth $3.7 billion and is up 240% for the year. That's just a testament to how much people love growth as Zillow could grow revenues as quickly as 60% to 70% for the year. Oh, and did I mention it has no earnings?

You want another wild contrast? Apollo Group ( APOL) exited Realogy at $47 and change in a gigantic secondary offering of 25 million shares. The stock's been down ever since then. But Zillow's secondary (also of insider stock) seems to have re-energized the stock after that initial decline.

I think this divergence has less to do with real estate and more to do with a dearth of multiple revenue stream Internet companies. Check out Yelp ( YELP) and LinkedIn ( LNKD), two other similar business models to Zillow. They just keep running and running.

If you liked this article you might like

Floyd Mayweather Just Joined List of 10 Outrageously Expensive Celebrity Homes

Move Away From Real Estate Stocks

Move Away From Real Estate Stocks

These Stocks Have Changed Direction

Zillow Sites Start Charging Fee for NYC Rental Listings, And One Big Broker Says No Thanks