Purely looking at technicals, here's why you should buy TZOO.
(1) 12-Month Return for TZOO was at 89%, and this was a lot higher than their industry same period return of only 10%. And in the same time period S&P 500 only gave a return of 16%, still a lot less. I know that historical return doesn't mean anything for this year. But if you extend the return to a longer period, it still gives a good sense on what to expect (together with recent events of course). (2) Their 5-Year Historical Return was at 58%, higher than their industry return of 12% and S&P of only 5%. We can expect this share to consistently provide higher returns that their industry, and the S&P 500. Next, (3) look at TZOO's Sharpe Ratio, which is a measure of their returns over the amount of risk of holding the stock, and then it comes to 0.65. Industry gives a figure of 0.38 and S&P 500 gives 0.44, so with Returns/Volatility hovering on the top, and Volatility hanging on the bottom, their Sharpe Ratio is a good reason meaning that you're well compensated for the risk relative to other investments elsewhere. On the opposite end of the spectrum (4), looking at their P/E ratio, TZOO ends up at 31.56, comparatively lower than others in their industry at 34.4, but higher than the S&P 500 at 16.32.
Sure the above is based more on historical stuff, so if you look at something more recent, then think about this one. More recently, (5) with their earnings announcement earlier this month, revenues had increased 27% to $17.7 million, with net income increasing 159%. Both added from an increase in revenue combined with lower operating expenses. Also, with only $23,000 in capital expenditure for their last quarter, there is a large chunk of free cash flow just sitting around for expanding. At $5.4 million, its also up 182% from last year. Sure their shares saw a drop right after it was announced, but since then it has gone back up over 10%, and the momentum is there to continue.
Logically thinking too, (6) we all saw a peak in 2006 when TZOO's shares soared an unbelievable 150% over a matter of days. The insider selling has pretty much dried up, and with so many investors shorting Travelzoo, they'll have to buy it back when it's low, or whenever they just can't hold it out anymore. Chances are, with so many shares in short positions, those unfortunate investors will have to buy the stock sometime this year.