The shine that you'd expect from jewelry sales doesn't seem to translate well to the industry being well thought of or highly rated by investors.

Maybe it's the intense competition or the presence of deep discounters like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) that tarnishes the industry, but of the more than 31,000 investors participating in Motley Fool CAPS -- the Fool's free investing community -- jewelry stocks as a group garner just two of five possible stars.

Surprise, surprise
Considering the general consensus opinion that there's not much cut or clarity in the carat of jewelry as an investment, it's interesting to see the sterling performance of the jewelers over on Motley Fool CAPS. Over the past year, jewelry retailers have been gilt with a better-than-57% return. That doesn't put them at the top, but for an industry that doesn't have much sheen with investors, it's pretty surprising.

Of course, there have been some disappointments. Both Charles & Colvard and Finlay Enterprises lost 51% and 38%, respectively, but Tiffany (NYSE:TIF) rose 54% and Signet (NYSE:SIG) returned 25% for the year. Overall, the record has shown decent growth. Apparently, diamonds are everyone's best friend.

A fine China place setting
Although you probably think of books when you think of (NASDAQ:AMZN), its jewelry sales continue to dazzle. For example, in last year's fourth quarter, jewelry and watch sales more than doubled. The company shipped more than 130% more diamond stud earrings and twice as many colored gemstone pieces, as well as a 171% year-over-year increase in watch sales.

Pure play Internet jeweler Blue Nile (NASDAQ:NILE) also had a banner year as the stock -- recommended by both Motley Fool Hidden Gems and Motley Fool Rule Breakers -- increased 89% for the year. CAPS player jehibber likes the focused nature of Blue Nile's business.

I like the concept. Sells for 20-40% below the typical jewelry retailer. 90% of revenues come from diamond sales, and they do not plan to diversify into other high end products. The average customer here spends about $5,600, which is twice the average amount spent nationally. Seems to be pleasing customers, last year 20% of their revenue came from repeat customers. Controls 4% of U.S. market, hopes to grab 20-30%. 34% revenue growth YOY. 13% owned by insiders, but 28% short right now. I do not like the high price, but believe its a good bet long term as long as they keep grabbing market share.

That's echoed by industry research and analyst firm Netscribes:

Blue Nile enjoys key competitive advantage through enhanced supply chain relationships with world's premier diamond manufacturers, which helps the company to offer consumer a wide range of diamonds at lower prices. Their strategy is to heavily invest in marketing and advertising to position itself as a high-end online retailer of fine diamond and non-diamond jewelry which is reflected through overall spend in their selling, general and administrative expenses to strengthen its brand.

At the low end of the market is Zale (NYSE:ZLC), which has been caught between Scylla and Charybdis in the form of Tiffany and Wal-Mart.

One Fool's view
There still looks to be plenty of polish on the jewelry business, assuming you can distinguish the true diamonds from the cubic zirconia. Tiffany, which has recovered well from the stumble it made when it tried to tap the middle market by offering low-priced silver trinkets, saw profits rise in the latest quarter by 15% from the year-ago period. Blue Nile, even trading at 70 times earnings, looks like it has room to expand and has potentially unlimited reach.

Yet one can't forget, either. Perhaps not the 800-pound gorilla, its growing presence in the jewelry business certainly makes it a rival that all retailers have to contend with.

What's your view?
But you can have your say on what makes a good investment these days at Motley Fool CAPS. Work with more than 31,000 professional and novice investors alike to uncover the best companies, both at home and abroad. Best of all, it's completely free!

Blue Nile is a recommendation of both Motley Fool Hidden Gems and Motley Fool Rule Breakers. is a recommendation of Motley Fool Stock Advisor. Wal-Mart is an Inside Value choice. Try any of our newsletters free for 30 days.

Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.