Looking Back at Travelzoo's Terrible 2011

As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Travelzoo (Nasdaq: TZOO  ) . Combining the convenience of travel portals like priceline.com (Nasdaq: PCLN  ) and Expedia (Nasdaq: EXPE  ) with the daily deal attributes of Groupon (Nasdaq: GRPN  ) , Travelzoo carried a lot of momentum into 2011. But Travelzoo seems to have floundered lately, and the stock has fallen sharply this year. Below, I'll take a closer look at the events that moved Travelzoo's stock this year.

Stats on Travelzoo

Year-to-Date Stock Return (34.8%)
Market Cap $430 million
Revenue, Trailing 12 Months $142 million
1-Year Revenue Growth 31.0%
1-Year Profit Growth (95.4%)
CAPS Rating (out of 5) **

Source: S&P Capital IQ.

What happened to Travelzoo this year?
Investors seem to have gotten a reality check on the no-moat nature of deal-focused sites like Travelzoo. OpenTable (Nasdaq: OPEN  ) and Groupon were just a few of the many companies getting in on the daily-deal buzz, but as other players like Amazon.com-supported (Nasdaq: AMZN  ) LivingSocial got into the space, it became clear that daily-deal companies would have serious competition.

But the floodgates really opened in July, when Travelzoo missed estimates on both sales and earnings. With subscriber growth slowing, the stock couldn't support the massive multiples investors had put on it, and shares now stand at barely a quarter of their highs earlier this year.

One of the stranger episodes for the company this year came from "ChaPaVe Partners," which made a "tactical tender offer" for 1.5 million shares of Travelzoo at $40. The terms of the offer were so unusual, though, that it led many to conclude that it was probably bogus.

As the year ends, Travelzoo needs to establish its dominance in the travel-deal niche. If it can, then the future may be brighter for the company than the past has been. Until then, though, 2011 will be a year to forget for Travelzoo.

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Click here to add Travelzoo to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of OpenTable and Amazon.com. Motley Fool newsletter services have recommended buying shares of priceline.com, Amazon.com, OpenTable, and Travelzoo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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