I'm accustomed to writing about a stock, buying it for my portfolio, and then promptly seeing its price trend downward. As a buy-and-hold investor, that isn't too big of a deal. But let's be honest: Who doesn't like immediate positive feedback?

With that in mind, I was pleasantly surprised to see last week's earnings release from Travelzoo (Nasdaq: TZOO).

First, the cold, hard numbers
While investors were probably more focused on the 10% revenue and 32% earnings beats, a look at how Travelzoo has been faring year on year paints just as rosy of a picture.


First Quarter, 2010

First Quarter, 2011


Revenue  $28,520  $37,000 30%
Non-GAAP EPS  $0.15  $0.37 147%
Subscribers 17.8 million 19.9 million 12%

Revenue and earnings in thousands.

Local deals
Travelzoo already differentiates itself from better-known travel portals such as priceline.com (Nasdaq: PCLN), Orbitz (NYSE: OWW), and Expedia (Nasdaq: EXPE) by publishing travel deals which aren't available anywhere else on the Web. And now, it's going one step further by entering the "deals" market currently dominated by Groupon and LivingSocial.

How are things going for what Travelzoo dubs "Local Deals"? Well, check out the chart below and you'll see that the initial foray has been a success.



Gross Revenue

Q3 2010 12  $800
Q4 2010 30  $8,000
Q1 2011 48  $16,200

Gross revenue in thousands.

In the company's most optimistic outlook, it sees Local Deals entering 200 markets, serving 30 million subscribers, and bringing in $780 million annually, a 12-fold increase from today.

Foolish takeaway
Make no mistake about it, Travelzoo is not cheap. Shares are currently trading at around 86 times the past year's adjusted earnings. You may get a chance to buy the company on the cheap in the future, but then again, you may not.

With adjusted earnings having grown 147% last quarter, an excellent management team that has the company firing on all cylinders, and the possibility for a buyout still within the realm of reason -- Google (Nasdaq: GOOG) may see it as an enticing play since losing its bid for Groupon --Travelzoo still deserves a spot in the portfolio of the truly audacious.

Not sure whether you're sold on the Travelzoo growth story? Add the company to your Watchlist to keep tabs on it.