Using the likes of Home Depot (HD) and Pulte (PHM) as totems for the resurgence of the housing industry is so old school. Sure, as expected they surged right in line with housing sentiment over the past two years.
But since the start of the year, it’s the online listing services, Trulia (TRLA) and Zillow (Z) that are benefitting most from the second leg of the housing recovery.
To be clear, those near triple-digit gains came in less than one quarter. When it comes to anything housing related it seems that its either boom or bust., as suggested by these PE ratios. And right now both online real estate search stocks are in mega-boom mode.
There’s no question the housing market is rejuvenated. Bidding wars have become common -- and no, not just on the coasts -- as buyers eyeing rising prices, economic green shoots and the attendant expectation that mortgage rates won’t be falling from here are jamming open houses amid a low inventory of homes for sale. That in turn ups agents’ appetite (and budget) for advertising on the listing search sites. But at current valuations you’ve got to believe there’s near unlimited upside in revenue growth for the two firms whose name recognition among homebuyers overshadows actual revenue. In 2012, Trulia -- which went public last fall -- had $68 million in revenue. Zillow, public since July 2011, had $117 million in revenue.
Carla Fried, a senior contributing editor at ycharts.com, has covered investing for more than 25 years. Her work appears in The New York Times, Bloomberg.com and Money Magazine. She can be reached at firstname.lastname@example.org.
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