Penny stocks can be highly rewarding and equally risky (learn more about Penny stocks here: Are Penny Stocks a Good Investment?). Thus to help investors (with an appetite for risk), TipRanks brings Penny Stocks Screener to find the ones with a higher likelihood of beating the broader market. Using the Screener, we came across Travelzoo (NASDAQ:TZOO) stock with an Outperform Smart Score on TipRanks. Moreover, it has significant upside potential, which supports the bull case.
Here’s What Makes Travelzoo Stock Attractive
Travelzoo is an online media marketplace that offers travel, entertainment, and local deals. TZOO primarily makes money in the form of advertising fees. Further, it also earns transaction-based revenues by selling vouchers and subscription revenues from Jack’s Flight Club, its members-only service offering cheap airfares.
The pandemic-led slowdown weighed on TZOO stock, which is down more than 55% in one year. However, easing travel-related restrictions and a strong rebound in demand provide a solid base for growth for TZOO.
TZOO returned to profit in Q2 of 2022. Moreover, the Q2 profitability was higher than pre-pandemic levels as highlighted by Holger Bartel, the company’s global CEO. Bartel stated that the company’s efforts to improve efficiency are gaining ground and “resulting in higher operating margins.”
He expects TZOO’s revenue to continue to show recovery and grow in the coming quarters. Further, TZOO also announced that its Jack’s Flight Club marked a 25% increase in its number of premium members since August 2021, which is encouraging.
Further, the launch of its Travelzoo META service, the paid membership offering that provides Metaverse travel experiences, provides a long-term growth opportunity.
Is Travelzoo Stock a Buy, Sell, or Hold?
On TipRanks, Travelzoo stock commands a Strong Buy consensus rating based on three Buy recommendations. Moreover, the analysts’ average price target of $12.33 implies a strong 158.5% upside potential.
TZOO stock also has positive signals from insiders and retail investors. TipRanks’ data shows that insiders bought Travelzoo stock worth $136K. Meanwhile, 3.1% of these investors increased their exposure to TZOO stock in the last 30 days.
Travelzoo targets affluent customers, which positions it relatively well even amid macro challenges (the company’s survey shows that 58% of its U.S. members took three or more vacations in 2021). Further, management’s upbeat revenue guidance and improving margins are comforting. However, concerns over advertising revenues and a prolonged inflationary environment could play spoilsport.