To The Moon

In today's edition, we will track the fundamental readings of long-term bullish companies in strong (TigerTrade Top 1 Gainer) concepts each week and look forward to your attention and discussion.

Disclaimer: Capital at risk. This is not direct financial advice or a recommendation to acquire or dispose of any investment, but for communication only.

Both the CPI and PPI continue to progress lower, though core services inflation remains sticky. Meanwhile, the Fed is closely watching an uptick in leading indicators like initial jobless claims to signal that the labor market is indeed softening.

The best-performing industries are tires & rubber, interactive media, security & alarm services, office services and internet & direct marketing retails.

Considering the different perceptions of the stock, this time TigerPicks choose  $旅游族(TZOO)$ to have a fundamental highlight to help users understand it better.

$旅游族(TZOO)$

TZOO is a digital publisher specializing in travel and experiences. The company has several websites that offer deals to readers. The deals are advertisements paid for by travel companies.

Amidst these hullabaloos, Travelzoo navigated the stormy market. Its efforts and strategies proved fruitful as revenge travel started. Despite inflation, its operational strategy and the easing of restrictions helped sustain its rebound. Also, it maintained a sound financial positioning that showed its adequacy. The company is still sustainable while covering its borrowings and capital returns.

Meanwhile, the stock price is still at rock bottom. It appears to be bouncing back from its lows in the past two years. Even so, it could be an excellent opportunity to purchase its shares at a discounted price.

Company Performance

The operating revenue amounted to $70.6 million, a 13% year-over-year growth. It was also 67% of the 2019 revenue and has shown consistent revenue growth since 2022. Indeed, the easing of restrictions stimulated revenge travel. Although these two factors were more behavioral, we could still quantify this. In a survey, almost half of travelers opted to use online booking and advertisement websites. Being at home for too long, change in scenery, quality time with family, and relaxation were their primary motivation.

In the quarterly values, the impact of inflation was most visible in 3Q 2022 as revenues dropped. Yet, it was still higher than the same quarter in 2021. The fourth quarter revenue proved the resilience of $旅游族(TZOO)$ as revenue rose to $18.6 million. It was also the highest quarterly value in the last three years. Aside from the pent-up demand for travel, the decreasing inflation raised most travelers' purchasing power. We can also attribute it to other surprising factors.

Operating Revenue

First, the labor market transformation allowed more entrepreneurs and employees to travel. In a survey, only 50% of respondents had remote work flexibility at varying levels. But about two-thirds of respondents were traveling more often due to it. The same survey revealed that more people increased their travel duration by over 20%.

Second, the impact of boarded reopenings across regions and revenge travel still played a vital role. It allowed more people to travel amidst the influx of domestic and international passengers. Despite the inflation, travelers decided to change their itineraries to maximize their travel budget. Third, the pricing strategy of the company worked to cushion the blow of inflation. In its quarterly presentations, the number of TZOO members was flat at 30.7 million in the first half. But it decreased to 30.5 million in 3Q and 30.4 million in 4Q. Even so, it was still higher than in 4Q with 30.3 million. We may attribute it to seasonality changes. What matters is that the operating revenue stayed stable and bounced back.

Current Members

Travelzoo remained an efficient company amidst the higher prices and lower members.

Costs and expenses remained stable. Their movements were proportionate to that of revenues. The company was still viable at 11%, a substantial increase from 2020 and 2021. Also, its 4Q operating margin reached 19% the highest in the last five quarters. Indeed, the company can withstand more headwinds, given its operational flexibility. The combination of its pricing strategy and efficiency worked well to stabilize its growth. It also succeeded in balancing revenue growth, operating capacity, and margins.

Operating Margin

This year, TZOO may see more fruitful results. It already has a grasp of its pricing strategy to handle inflation better. Also, the decreasing inflation may entice more members and stabilize costs and expenses. At 6%, inflation is now 34% lower than the 2022 peak. More factors may help cushion headwinds and sustain the performance, which will be discussed in the next section.

Why Travelzoo May Remain A Solid Company This Year

Travelzoo remained unfazed amidst inflationary headwinds. It was still a solid company with sustained revenue growth and expanding margins. Even better, inflation is more manageable today, given the continued decrease. Travelers may expect higher fares and accommodation fees as Spring and Summer approach. But with more stable prices of goods and services, travelers have better flexibility today. Over 80% of Americans plan to spend either the same or a higher amount on travel this year.

All these are just some of the driving forces in the industry. But what makes Travelzoo a solid company is its adequate financial capacity. Cash can still cover borrowings despite the over 50% cut. After all, it was used to cover outstanding vouchers. Accounts payables and other liabilities are also way lower than their value in 4Q 2022. Meanwhile, the percentage of cash reserves to total assets is 25%, making TZOO a very liquid company. TZOO can sustain its current capacity while paying borrowings and capital returns. It can withstand more headwinds while balancing growth with viability and sustainability.

Cash And Equivalents And Borrowings

Travelzoo is still a solid company amidst the disruptions in the past three years. It maintained well-balanced revenues and margins. Now, market prospects are inviting. As such, its performance may further improve this year. The decreasing inflation, changing work environment, and pent-up travel demand may become primary driving forces.

More importantly, it has adequate resources to increase its operating capacity. It remains a sustainable company with adequate cash reserves to cover borrowings and capital returns. Even better, the stock price has a high undervaluation and may bounce back. It is logical due to its solid fundamentals and market opportunities.

Stock Price Forecast:

Here are the target price forecast for the future 12 months from analysts on CNNMoney.com.

The 3 analysts offering 12-month price forecasts for Travelzoo have a median target of 13.00, with a high estimate of 18.00 and a low estimate of 10.00. The median estimate represents a +44.44% increase from the last price of 9.00.

Hope this analysis helps you get more understanding of the company's whole image, Tiger Picks will follow up the monthly performance as a longterm track.

Resource:

https://seekingalpha.com/article/4593655-travelzoo-bouncing-back-with-undervaluation

What are your thoughts on $旅游族(TZOO)$?

Bullish or bearish? Please leave your comment below.