BALITMORE ( Stockpickr) -- There's no question that the global recession put the squeeze on travel stocks. After all, as consumers cut back discretionary spending, lush vacations were one of the first things to get the axe -- and in the corporate world, with budgets shrinking and communications technology moving at breakneck speed, travel stocks have been getting an even smaller portion of the business travel pie.
While Rosetta Stone ( RST) isn't your traditional travel stock, the language software company's fates are certainly tied to travel. I like the fact that Rosetta Stone's profitability isn't hindered by slashed travel budgets -- language skills are equally valuable on conference calls and video chats. Similarly, the company's deep brand recognition has afforded it a very strong position in consumers' minds, a competitive advantage that's rare for an education company.
The last 12 months have been all about recovery for Morgans Hotel Group ( MHGC). The small-cap hospitality company has seen shares rocket 93.1% the past year following stock performance in 2008 that was truly cringe-worthy. With a current short interest ratio of 15.3, clearly many short-sellers still think that cringe-worthy performance is in store for 2010.
Travel booking website Travelzoo ( TZOO) is up 10% in the last week, a good sign that sentiment is shifting for the company's shares, which currently have a short ratio of 14.6. Travelzoo operates in the highly competitive online vacation business, acting as a virtual travel agent for consumers in a handful of countries. What's most impressive, though, is the fact that the company has managed to turn a profit in four of the last five years despite serious economic headwinds.
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