Ask Jeeves (NASDAQ:ASKJ) is one company that has lived through all the ups and all the downs of the Internet bubble. A few years ago, survivability was an issue, but no longer.

Unless you have been living under a rock, you know that Ask Jeeves is a search website that differentiates itself by letting users type complete-sentence questions. The company continues to make technological enhancements to its products. Its newest whiz-bang thing is a "Binoculars" website preview that can spare users from clicking through to a useless site. The company has also made several strategic acquisitions along the way, with the latest one being Tukaroo, a desktop search technology company.

Management has demonstrated a willingness to do whatever it takes to remain innovative and competitive. This is important for any type of company, but especially for a firm in the incredibly competitive Internet search space. From an execution standpoint, I think this company's a winner.

Like all Internet stocks, Ask Jeeves looks expensive. If you want to invest in high-growth areas, you'll have to learn to live with the idea that the valuation metrics won't look great. Ask Jeeves trades at 13 times sales and 18 times book value. The forward price/earnings is only 24, though, and earnings are expected to grow 40% from 2004 to 2005.

Ask Jeeves has strength in many areas of its business. Its return on equity is 47%, and there's plenty of cash in the bank. There seems to be a good balance, then, between high valuation statistics and signs of excellent growth.

The biggest fundamental problem for me to grapple with is the massive amount of insider selling. Over 2 million shares have been sold in the last six months.

High valuations are not the biggest risk for shareholders, however. The biggest risk is a supply-and-demand risk that may come into play when Google debuts its IPO. In my opinion, a big part of the bubble bursting in 2000 was because the supply of Internet stocks outpaced demand. Remember The and

Demand for Internet stocks in 1998 and 1999 was insatiable, and consequently, investment banks flooded the market with Internet IPOs, creating too much supply. Eventually, the bubble burst, many companies disappeared, and the supply-and-demand balance worked itself out.

The market cap for all search companies looks to be around $50 billion. The articles I have read about Google suggest its market cap will be about $20 billion. That's a lot of supply coming to market. Will investors sell Ask Jeeves or InfoSpace (NASDAQ:INSP) in a perceived upgrade of quality? No one knows the answer, but the potential risk is there.

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Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, neither he nor his clients owned any of the stocks mentioned.