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Updated from 1:05 p.m. EDT

Internet stalwarts


(EBAY) - Get eBay Inc. Report



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powered through their 52-week highs Tuesday as a combination of money manager greed and short-seller fear produced decisive upward pressure.

In a sign of how potent the post-Iraq war rally has become, eBay's intraday surge through the $100 barrier for the second time this month left the stock at levels last seen in March 2000 -- the month the stock market bubble burst.

By the 4 p.m. EDT close, eBay had gained $3.61, or 3.6%, to $103.05. Yahoo! tacked on $1.48, or 5.2%, to $29.97, while Amazon was up $2.13, or 6.5%, to $34.85.

"There is some short-covering and some institutional buying; we're seeing a combo of both," says Jack Francis, co-head of equity trading at UBS. "Clearly people are nervous about their shorts. The volume isn't really, really robust but nonetheless it's decent."

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But he and others are skeptical that the rally can be sustained. "The question of fundamentals will come into play. Right now, the market seems to be ignoring it, because fundamentals certainly don't support the prices."

Lately, plenty of anxious money managers have been chasing the recent hot stock performance, says Vincent Colicchio, co-manager of the

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All-American Equity fund. "If you look at the S&P tech components, the Net category has been the best-performing. So money managers don't want to lose performance and they're chasing them. But we've avoided them because we think they're overextended."

As of Friday's close,

Internet Index had jumped 32.2% year to date, far overshooting the Nasdaq's rise of 13.1%.

To be sure, Colicchio gives the Internet retail group credit for improving fundamentals. "It's becoming clear there's a real value there. The Internet retailers last year ... actually broke even financially, so that's a seminal event. And Yahoo's doing a good job of diversifying away from advertising, so things are moving in the right direction. But that doesn't mean they're not overvalued."

He says he didn't own the stocks even when they traded at relatively depressed levels. "Even a year ago I thought they were expensive," says Colicchio. The latest run, he says, "just doesn't add up, and when things don't add up there's eventually going to be a fallout."

Still, those looking for some fundamental justification point to the group's robust double-digit earnings growth -- a rare commodity in today's market. First Albany analyst Youssef Squali has a buy rating on eBay with a $107 price target, which the stock is fast approaching. "All indications are that the quarter is tracking very well and we expect yet again another blowout quarter when they report in July," he says.

"On a PEG basis

price to earnings relative to growth, it's trading in line with others like Yahoo! and Microsoft, at around 2.2," he says. "It's trading at roughly two times its growth rate, which is pretty frothy, pretty expensive. But a lot of the market leaders that have strong earnings momentum and dominate their market like Yahoo! and Microsoft do deserve and continue to trade at that multiple." First Albany hasn't done banking for eBay or Yahoo.

In the most recent quarter, eBay's online revenue was up 37% over the prior year, he says. Yahoo! has also been on a tear, with last quarter's growth up about 45% year on year.

But Squali acknowledges there's one more reason the triad of eBay, Yahoo and Amazon have done so well. "There's something to be said about the scarcity of value," he says. "If you're a large-cap portfolio manager and you want to own Net stocks, there are really only three you can buy: Yahoo!, eBay and Amazon."