There is no guarantee that an engagement ring from Blue Nile (NASDAQ:NILE) will trigger a fruitful marriage, but the upscale Internet jeweler has certainly done everything it can to make sure that its shareholders live happily ever after.

Blue Nile has posted yet another strong quarter. Net sales climbed 27% to $67.4 million. Earnings soared 64% to $0.18 a share, well ahead of the $0.16 per share that analysts were expecting. (Read about last quarter's sparkling earnings.)

Once again, Wall Street failed to grasp the e-tailer's profit-producing power. Blue Nile has blown past profit targets in all but one quarter since the company's 2004 IPO.

With this refreshingly scalable business, margins continue to widen. Gross margins inched slightly higher, but the company kept cost controls in check beyond that to create an even wider disparity on the way to the bottom line.

The company isn't resting on its laurels. Last month it began offering free priority shipping with every order. Why not? It has worked wonders for (NASDAQ:AMZN) on media products. Besides, when your average order size is $2,093, why quibble over petty shipping costs?

Blue Nile is also aggressively expanding in other countries. Net sales in Canada and the United Kingdom more than doubled during the quarter, even though 93% of Blue Nile's sales are still coming from its namesake domestic website.

Despite Blue Nile's growth and healthy margins, it has yet to attract a worthy competitor. Mainstream online e-commerce hubs like Amazon, eBay (NASDAQ:EBAY), Wal-Mart (NYSE:WMT), and Overstock (NASDAQ:OSTK) move a lot of jewelry, but not the high-end stuff that makes Blue Nile tick. Upscale chains like Tiffany's (NYSE:TIF) and Birks & Mayors (AMEX:BMJ) haven't put the resources behind website initiatives to matter.

With the holidays around the corner, Blue Nile is positioning itself for its seasonally strongest quarter. Recent site tweaks, along with the free shipping offer, should stir up sales. That's the way the company sees it, anyway. Blue Nile is raising its guidance for all of 2007. It is now looking to earn $1.00 to $1.05 per share, with net sales coming in between $316 million and $322 million.

Like its high-end rings, Blue Nile is expensive. Closing yesterday at 71-75 times this year's projected profitability, it's not a cheap multiple to stomach. However, the stock shot higher still after the report, because investors are perpetually impressed by the company's heady growth.

That explains why Blue Nile has been such a successful recommendation to Rule Breakers subscribers. The stock has soared 146% since David Gardner singled it out in the inaugural issue of the growth stock newsletter service three years ago.

With few online retailers outside of Blue Nile and Amazon inspiring investor enthusiasm in that time, it's a case of living happily ever after, indeed.

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Blue Nile has been recommended to Rule Breakers newsletter readers. Amazon and eBay are active Stock Advisor picks, while Wal-Mart is an Inside Value staple. Pick a newsletter, any newsletter, and get the next 30 days free.

Longtime Fool contributor Rick Munarriz proposed to his eventual wife 17 years ago, back when there was no commercial Internet around. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.