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5 Online Travel Stocks With Upside

Stocks in this article: PCLN OWW EXPE TZOO MMYT

Travelzoo (TZOO) is a global Internet media company operating in North America and Europe. The company enables airlines, hotels, cruise lines, vacation packagers, and other travel and entertainment companies to reach out to millions of consumers. Of the 4 analysts covering the stock, 75% recommended buying, while the remaining advise holding. On an average, analysts estimate a 36.8% upside from current levels.

As per analysts at Investment U, Travelzoo is among the three companies that could benefit from merger and acquisition deals in 2011. The analysis is based on Google's (GOOG) $6 billion offer to Groupon, a company that releases daily travel offers. Google is aspiring to capture the 15 million subscribers Groupon has on its mailing list. However, after Groupon declined, the offer is open to Travelzoo, which operates on similar business lines and has almost 21 million subscribers. Also, much below the inflated valuation for Groupon, Travelzoo can be acquired for $700 million.

Meanwhile, a company executive revealed that in 2011, the trend will be a growing demand for planned attractive travel destination deals at affordable prices. Looking ahead, Travelzoo is likely to benefit from the strong growth in the travel industry in the upcoming months.

After unveiling its Local Deals business in the U.S. in mid-2010, Travelzoo launched its European operations in mid-December 2010. The Local Deals business is purely an extension of the existing entertainment deals service, however, with a wider product range providing users direct booking through Travelzoo. The new division was launched initially in the U.K. for subscribers in London with the facility to mail area-specific deals for subscribers.

As per Travelzoo's U.K. managing director, of the 2.1 million Travelzoo subscribers in the U.K, almost 95% include their postcode in their profile in order to receive Local Deals emails. This business model, also adopted by Groupon, is considered to be one of the fastest growing web businesses.

With a huge base of 4.5 million subscribers in Europe, the company plans to launch the Local Deals business in and around major European populated areas. Moreover, after only four months of launch in the U.S., the business has attracted 100,000 deals and accounted for almost $3 million in gross revenue.

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