| Stock (Symbol) | Stock Price | |
Travelzoo (TZOO) |
$38 |
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| Data is as of | Expected to Report | Sector |
August 30, 2011 |
Oct 17 |
Retail & Travel |
| Sharek’s Take | ||
Travelzoo stock is a wild ride. I bought this stock at $47 (March) and it went as high as $101 (April), then down to $51 (June) and up to $91 (July) — then POP $31 (August). Now the stock’s $38 and might be in a grove higher. TZOO has $40 million in cash and after the latest fall it put a share purchase program in place to spend around $15-20 million to buy back stock. The total market cap on TZOO is $600 million, so the company could buy back 3% of shares. |
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| One-Year Chart | ||
 Travelzoo’s numbers look great. Investors really overreacted. I think what happened is money managers who own hot stocks loaded up on TZOO last quarter, then dumped the stock this quarter when the company didn’t whip estimates again. |
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| Earnings Table | ||
 TZOO had profit growth of 50% last quarter on only 34% sales growth (up from 30% 2QtrsAgo). I like when profits grow faster than sales.Travelzoo missed earnings estimates last quarter, which shook up investors. 7 cents of the 8 cent miss was from the TV add test. 2011 estimates were once $1.09, then $1.62, and now $1.45. This is still good. I think people are overreacting. Quit overreacting. $1.09 to $1.45 is a net positive. Quarterly estimates look awesome — really awesome. Yes estimates declined, but we knew they would. TZOO could grow profits 70% the next two quarters. And the stock is selling for 26 times earnings. |
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| Fair Value | ||
 Seriously? They took TZOO down to 26 times earnings? Seriously? With 70% growth estimated for the next 6 months? Travelzoo has as a lot of upside from these depressed levels. There’s considerable upside here. |
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| Ten-Year Chart | ||
 TZOO’s done this before. I remember the last high in December 2004. My sales manager owned TZOO and I told him to sell after I saw the stock hit the all-time high and back down off the parabolic move. That was an easy call. This latest “top” wasn’t so easy because you didn’t know how much the company was going to go on to earn. At the time estimates had been flying higher. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
17 of 20 |
There’s really good upside potential for TZOO. This stock has been treated like a red-headed step child. From here, TZOO looks a lot like a princess. Upside is great and profits are growing rapidly. Management just needs to get a better handle on estimates. |
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Aggressive Growth Portfolio
10 of 12 |
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