Things are finally going wild for Travelzoo (NASDAQ:TZOO). After a blowout March quarter, the company behind the popular weekly Travelzoo Top 20 email of sponsored vacation deals is at it again. Travelzoo closed out the June quarter with revenue climbing 42% higher to hit $17.4 million, slightly lagging the consensus analyst forecast. Margins improved to prop up a bottom line that nearly doubled to $0.23 a share, $0.02 per share better than analysts had been expecting.
Trading in Travelzoo has been up and down on the news. It's not like the scene we had back in April, when the company saw its shares shoot up roughly 50% on a buoyant first-quarter showing. I guess investors are getting used to Travelzoo finally delivering the goods, after a disastrous 2005 in which its quarterly reports consistently fell short. That came on the heels of huge gains in 2004, as the thin float helped exaggerate upbeat market sentiment.
Travelzoo has come a long way, even if the travel-deals publisher is still working from a simple business model -- one that theoretically could be easily duplicated by the likes of Expedia (NASDAQ:EXPE), Priceline (NASDAQ:PCLN), or Sabre's (NYSE:TSG) Travelocity.
The key is that Travelzoo was first and it has grown quickly. Its opt-in mailing list topped the 10-million subscriber mark earlier this year. The company is also growing slowly -- and as yet unprofitably -- in Europe.
The simplicity of the model and the lack of a moat are the only things keeping me from tugging on David Gardner's sleeve until Travelzoo becomes a Motley Fool Rule Breakers newsletter service recommendation. We've got an impressive growth stock here, complete with jaw-dropping margins and a clear path to continued growth. It just can't be that easy -- and that's why I am scratching my head on the sidelines as the Travelzoo parade marches on in.
Longtime Fool contributor Rick Munarriz has been inspired by a deal or two on the Travelzoo Top 20 list, but he does not own shares in any of the companies mentioned in this story. Priceline is a Stock Advisor selection. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
