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Special One-Time-Only Deal for Internet Stocks

They're the brash, annoying cousin of e-tail Web sites, but in recent days investors have treated them like holiday royalty.

They are the online direct marketers, companies like FreeShop.com (FSHP) and Cybergold (CGLD), whose sites are multimedia billboards of special offers, bonus points and just plain FREE stuff! And according to the latest figures from internet.com's Internet StockTracker subscription newsletter, they're the hottest 'Net stock on the ticker shelves so far this month.

The past week has been a phenomenal one for Internet stocks, with nine of 12 sectors tracked in the newsletter posting double-digit gains. The top sector in the week of trading through Wednesday was Advertising/Marketing, whose 15 companies gained an average of 41%, twice the increase of the runner-up sector, Portals.

Leading the Advertising/Marketing group was FreeShop.com, with a 111% weekly gain, and five other online direct marketers:

Cybergold - 78 percent
Netcentives (NCNT) - 78 percent
Webstakes.com (IWIN) - 72 percent
MyPoints.com (MYPT) - 57 percent
yesmail.com (YESM) - 55 percent

These six companies were among 17 across all Internet sectors whose stock gained at least 50% this week. And four of them were among the top 10 gainers (top six, actually).

For the entire month (Nov. 30 close through Friday afternoon trading), Netcentives is up 116 percent, followed by Cybergold (up 102 percent), FreeShop.com (81 percent), Webstakes.com (62 percent), yesmail.com (35 percent) and MyPoints.com (28 percent).

Netcentives has benefited from favorable media mention and a product - customer loyalty programs and services - that grows increasingly popular as Web sites shift their focus from eyeball aggregation to customer retention.

FreeShops.com, meanwhile, was given a boost by investors after announcing it had received more than 1 million orders in November for a wide variety of products distributed as part of free, trial and promotional offers.

Webstakes.com cut some promotional deal with Matchlogic, Excite@Home (ATHM) e-mail delivery division, but that's a marginal catalyst. What's really happening with these companies is that short-term investor excitement about this sector is causing all boats to rise, driving up stock prices and valuations.

But the tide already is receding. MyPoints.com and yesmail.com peaked on Wednesday and have been dropping since. By mid-January, most of the holiday spirits will be drained from this group.

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