Travelzoo’s numbers are down, but value investors are still cautious

As a value investor, I am constantly on the lookout for companies that are currently under-priced in the market relative to their future prospects for growth. As part of my search for such companies, I pay close attention to ones which have recently had a large drop in price due to a specific negative event. Often times such drops could be a good entry point to take a position if you believe the long term prospects are still good and the bad news is just a short term difficulty.

One such company that came on my radar the end of last week was Travelzoo (TZOO). On Friday morning October 12th the company issued a warning statement that its 3rd quarter sales and earnings would belower than expected.