[Investor Place] Luxury brands still digging up profits through precious gemstones

Despite consumers’ more frugal shopping strategies, it’s clear people still are buying jewelry. Let’s face it, there always is going to be a market for silver and gold and gleaming gemstones. And with the holidays just around the corner, that market will be expanding.

The jewelry business can be a fickle place. So, if you are interested in investing in a jewelry company, you’ll want to make sure it’s one with the right type of presence and operating strategy. Let’s take a look at two big-name companies now and how they size up to each other.

Tiffany & Co.

Tiffany & Co. (NYSE:TIF) is an iconic staple in the jewelry industry, and for good reason. For nearly 175 years the jewelry store has designed, manufactured and sold fine jewelry.

The company’s products include solitaire jewelry, engagement and wedding rings, non-gemstone, sterling silver, gold and platinum jewelry of all sorts. Tiffany also sells watches, sterling silver goods, china, crystal, fragrances, accessories and leather goods. With 233 Tiffany boutiques worldwide, the company has established a strong global presence. And in addition to in-store sales, Tiffany’s also distributes products through Internet and catalog sales, business-to-business sales and wholesale distribution.

In the current quarter, TIF is predicted to achieve 30% growth compared with its industry’s 20% growth. Full-year growth is expected to be over 27%. With gold prices on the rebound and the cost of diamonds rising, strong jewelry companies like Tiffany’s offer investors an alternative to buying into the mining sector.

Blue Nile

Blue Nile (NASDAQ:NILE) operates as an online retailer of diamonds and fine jewelry, selling its products worldwide. Blue Nile’s selection includes diamonds, gemstones, platinum, gold, pearl and sterling silver jewelry and accessories, as w! ell as w atches and other jewelry settings.

Unfortunately, the company has been in a rut lately. During the past 12 months the stock actually has dropped 19%. By the end of the year, NILE is only expected to be up 4% from 2010 values.

The stock is rated as a “D” in Portfolio Grader, indicating it is an immediate sell. So, if you own it, I suggest you get out of the position now.

The only thing NILE has going for it right now is its ROE, and that’s certainly not enough to make it a good buy.

If you’re looking for a stock with the least amount of inclusions, TIF shines much brighter than NILE.