Travelzoo Inc., who directs users to offers from airlines, hotels and other travel companies, faces two huge hurdles: growing competition and an inflated share price. Its wild ride is destined to end poorly.

For those with money to spend, the best bets lie with retailers New York & Co., which has had strong sales as the holiday season gets into full swing, and Inter Parfums Inc., which upped its guidance for 2006.

Shares of Travelzoo have soared 37% in the last month, closing on Friday at $23.75, but the warning signs for investors are clearly written in the stock’s performance. In shades of the dot-com era, Travelzoo started last year trading at less than $10, then zoomed to more than $100 before crashing to earth this year. Only in the past month have the shares shown any sign of life.

Investors should leave before the next act in this saga. Yes, the company is on a tear. The company’s sales and earnings have rocketed 60% so far this year as a result of more consumers turning to the Internet for travel information. But don’t expect the good news to last. The rise of online travel bookings has attracted such giants as Yahoo, AOL and Google, all of which are beefing up their travel offerings. Tiny Travelzoo, on track to generate about $51 million in revenue this year, risks being trampled into the dust.

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