There isn't a lot that Travelzoo
There will be challenges and opportunities in the year ahead. Let's go over the things that Travelzoo must do if it will make investors get over this year's 40% share-price slide.
1. Daily deals need to get hot again
Travelzoo's push in embracing Groupon's
Many of the companies that took to the model hopped off those coattails in recent months. Facebook, Yelp, and OpenTable
Travelzoo has stuck with it, and why not? It already had the aggressive sales team in place in ferreting out deals for the weekly Travelzoo Top 20 email of sponsored getaway bargains going out to millions of opt-in subscribers.
Groupon bouncing back in 2012 or a successful LivingSocial IPO may help, but Travelzoo can make its own luck here if it proves to investors that it -- unlike Groupon -- can turn a profit with that niche.
Analysts see Travelzoo earning $1.37 a share in 2011, and $1.69 a share in 2012, so overall the company is clearly moving in the right direction on the bottom line.
2. Travelzoo has to withstand the Big G assault
Traditional travel booking websites are crying foul over Google's
This is a move that smacks Expedia
3. Subscriber growth needs to accelerate
Travelzoo closed out the third quarter with 21.3 million unduplicated subscribers through North America and the United States. It's a big number, but it's just 14% ahead of where that tally was a year earlier and just 3% ahead of where it was three months earlier.
Travelzoo's milking more out of its membership base. Revenue soared 40% in its latest quarter and earnings grew even faster. However, for the model to succeed Travelzoo needs to keep signing up more bargain seekers than those that decide to opt out.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Travelzoo. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
The Motley Fool owns shares of OpenTable and Google. Motley Fool newsletter services have recommended buying shares of Google, OpenTable, and Travelzoo. Try any of our Foolish newsletter services free for 30 days. 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 Motley Fool has a disclosure policy.