| Stock (Symbol) | Stock Price | |
Travelzoo (TZOO) |
$85 |
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| Data is as of | Expected to Report | Sector |
April 29, 2011 |
Jul 18 |
Retail & Travel |
| Sharek’s Take | ||
Travelzoo has been one of the hottest stocks during the past two months. Purchased in the Growth Portfolio and Aggressive Growth Portfolio on 3/15/11 at $47, the stock broke$100 within 6 weeks.Travelzoo provides travel deals on the Internet, but is not a travel agency or online travel agent. Its an advertising company for more than 2000 travel companies like Avis, Royal Caribbean, Hilton Hotels and Walt Disney Parks & Resorts. The Travelzoo Top 20 is a weekly list of select travel deals chosen in 24 offices around the world. This list gets emailed to 22 million free-subscribers. You too can sign up here.
The growth opportunity TZOO has is with Local Deals which offer discounts on restaurants and entertainment similar to those Groupons. Groupon’s are believed to g a 50% cut of the gift certificate, Travelzoo takes only 30-40%. I can tell you from buying deals from both companies that Travelzoo has the better deals right now.et |
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| One-Year Chart | ||
 Travelzoo is not going to keep running higher. The stock clearly made a climactic run and will need to correct and build a new base.TZOO’s P/E of 52 is high for most companies, but with profits up around 150% the past three quarters and 90% growth expected the next two quarters, this stock can continue to climb. The estimated Long Term Growth Rate just increased from 25% to 30%. |
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| Earnings Table | ||
 TZOO has profit growth of 147% last quarter on only 30% sales growth. Local Deals are really profitable.Travelzoo whipped earnings estimates (as I thought it should).
I think investors underestimated the bump in profits this secondary business would provide.
2011 Annual Profit Estimates jumped from $1.09 to $1.62 — this is the biggest reason we can’t put a true price on what TZOO is worth. We are just one-quarter into the year and there’s no telling what TZOO could make this year. $2.00? $3.00? Its tough to sell a stock when you don’t know the upside.
Quarterly estimates jumped and now profits could grow 90% or more the next three quarters. This company is on fire.
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| Fair Value | ||
 Since estimates jumped so high, I’m giving TZOO a Fair Value P/E of 65. This equates to a fair value this year of $105 and next year of $148. TZOO just bumped its head on $104 so this fair value seems likely. |
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| Ten-Year Chart | ||
 TZOO went from from $9 to $95 during 2004. I called the top back then, and told my sales maager to sell his TZOO shares (he didn’t).Profits are expected to jump 103% this year on top of the 105% growth last year. The stock is clearly expected in the ten-year view. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
5 of 20 |
TZOO is ranked 5th of 20 stocks in the Growth Portfolio Power Rankings. The numbers are increadable and there’s no telling where this stock cvan go. I just feel the stock has topped-out in the short-run after the rapid move higher the past two months.
TZOO is ranked 5th of 10 stocks in the Aggressive Growth Portfolio Power Rankings. Traders can consider selling shares on a move higher. |
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Aggressive Growth Portfolio
5 of 10 |
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