1-800-FLOWERS.COM, Inc. (FLWS), IAC/InterActiveCorp (IACI), Blue Nile Inc (NILE): The Art Of Selling Love

Diamonds are Forever

Blue Nile Inc (NASDAQ:NILE) is one of the most prominent online jewelry sites, with a particular focus on diamonds and engagement rings. The company shook up the diamond world by moving it online in a big way, creating clarity in a largely opaque business. That disruptive image made the company something of a market darling in the middle of the last decade, with its shares running up to the $100 mark.

After reality set in, however, the stock’s price fell sharply. It now trades hands at around $30 or so. That said, the company’s top line dipped only slightly during the recent recession and revenues are now above where they were leading into the economic slump. Despite the fact that Blue Nile Inc (NASDAQ:NILE) sells clear non-necessities, it’s bottom line stayed in the black throughout the recession. That’s a statement to the strength of the company’s business model.

Diamonds and the metals used to display them (gold, platinum, and silver) are commodities, so costs can vary dramatically over time. With metal prices at elevated levels, though off from recent highs, the bottom line has been under some pressure. Those input costs, however, eventually get passed on to customers. The company also uses a unique model whereby it doesn’t actually buy diamonds until they are sold, which helps to keep costs down.

With a good brand name and solid sales momentum, this could be a long-term play for growth investors.

Love is in the Air

The three companies above all directly touch the concept of “love.” While vague in concept, it is a great niche in the business world. Blue Nile Inc (NASDAQ:NILE) has a bit of turnaround appeal, as the market has clearly taken a new view of its growth prospects. That said, they remain solid. IAC/InterActiveCorp (NASDAQ:IACI) and 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) are both more dear at the moment, but that doesn’t mean they should appeal to growth and momentum types.

The article The Art Of Selling Love originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Blue Nile. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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