In recent columns, I have discussed the Internet and its growing role in everyday life. As an avid user of the Internet for everything from paying bills on-line to buying goods and planning my vacation, I could be considered the typical Internet consumer.

 I buy books via Amazon.com Inc. (NASDAQ/AMZN). I sell and buy via eBay Inc. (NASDAQ/EBAY). I have even bought personal items such as clothing on the Internet.

 Now, let me tell you, I'm not much of a jewelry guy. Other than an engagement ring and a wedding band for my wife, I really don't buy jewelry at all. But many of you probably do...

 A rising player in the on-line sale of diamonds, jewelry, and watches is Seattle, WA-based Blue Nile Inc. (NASDAQ/NILE). The web site includes about 55,000 independently certified diamonds, along with 1,000 styles of fine jewelry, such as rings, wedding bands, earrings, necklaces, pendants, bracelets, and watches. At first, you may think why anyone would buy such personal items without having a chance to physically try them on and see them in person, but, trust me, it doesn't appear to matter as sales are booming. Perhaps shoppers know exactly what they want and look to Bluenile.com to get the cheapest price. Whatever the reason, Blue Nile is doing well.

 The small-cap company is profitable and has beaten consensus earnings estimates in each of the last four straight quarters. The stock's valuation is reasonable when compared to other major large-cap on-line retailers. Blue Nile trades at 33.22x its estimated FY06. Sounds a bit high, but consider it in comparison to Amazon.com (46.03x) and eBay (38.10x), and you could squeeze some value out of Blue Nile. Its PEG of 1.45 is also not cheap, but it's a bargain when you take a look at eBay (1.73) and Amazon.com (3.09).

 I'm a firm believer in the Internet as a commercially viable business. The rising sales on-line year-over-year support this. I may not be a jewelry aficionado, but I do understand trends. Consumers are clearly making the move to the Internet to buy diamonds, jewelry, and watches. A company like Blue Nile, which started in 1999 as RockShop.com, appears to be ahead of the pack.