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September 1, 2004 Stock Pick: Travelzoo, Inc. (TZOO)

Stock Price: $45.00 (long-term strong short)

Travelzoo, Inc. is the Internet's largest publisher of travel offers available directly from hundreds of travel companies. They currently list more than 300 travel advertisers to over 7 million subscribers.

In the most recent quarter the company reported $7.2 million in revenue and net income of over $1.3 million. The net income figure is impressive; however, we believe the stock has become grossly overvalued. TZOO currently has a P/E ratio of over 250.

TASR was not even this overvalued when it hit over $64 a share. Now, TASR has fallen to just under $28. It is only a matter of time before the traders move on to another stock.

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