A New Way to Play Housing's Recovery


It’s not a builder or a real estate brokerage, but this technology company stands to profit handsomely from the housing recovery, writes Jason Cimpl of Top Stock Insights.

Trulia (TRLA) is a great stock to own if you’re a believer in the housing recovery, which we are. The company offers free housing data, and their large and continually refreshed database contains more than 112 million properties and 4.2 million active listings.

Though the housing recovery will help Trulia’s business, the company has a bigger trend in its favor: 89% of consumers now prefer to use online search for researching properties. In return for delivering this helpful service to consumers, the company receives money from advertisements and real estate agents looking to drum up business.

There are more than 2.8 million real estate agents in the US, spending a total of $24 billion per year on advertising. Of that, $12 billion is spent offline (newspaper, print, etc). So there is a huge opportunity to seize portions of that money as it moves from off line to online advertisements. Trulia sits smack in the middle of this opportunity.

The company increased its number of subscribers by 34%, to 22.7 million in the nine months ended September 2012. Moreover, the average monthly revenue per subscriber increased to $148 from $97 during the same period—significantly higher than the average revenue per subscriber of $47 in 2009.

Trulia also provides specialized GPS-based search applications for mobile devices. Mobile advertising is a huge and rapidly growing segment, and also one area of online advertising that Google (GOOG) does not do well.