Tiffany, Zale Shine Bright

All that glitters sells in the quarter for jewelers.

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Diamonds are an investor's best friend today as the weak economy fails, for different reasons, to dampen sales at Tiffany & Co. (TIF) and Zale Corp. (ZLC).

Tiffany beat estimates handily and doubled its second-quarter profits thanks to sales in Europe and Asia, where the economic slowdown hasn't affected its wealthy customers. The company raised its sales estimates for the year even after warnings sales in the United States and Japan will slow. It seems China, London, and foreign tourists visiting American stores are keeping sales steady. Total sales are expected to rise 13 percent this year. The company is still getting squeezed by slowing demand at the ultrahigh end (above $50,000) and among customers spending less than $500, but the middle ground seems to be holding.

Stacey Widlitz, an analyst at Pali Research, says Tiffany remains "one of our favorite names" thanks to continuing store growth and a global brand that will keep foreign customers shopping at Tiffany outlets closer to home even if a recovering dollar makes vacation spending sprees in New York and other American spots less attractive. Shares climbed more than 10 percent on the news.

Zale, meanwhile, turned in better-than-expected results despite being the jeweler to thousands of hard-hit Middle Americans. The company, the largest jeweler in America with more than 2,100 locations, said its slimmer losses (15 cents a share vs. a 32-cent loss expected by Wall Street) stemmed from efficiencies including a permanent $100 million reduction in inventories. Shares popped 18 percent in the day, continuing a fairly stellar year for the company. Shares have more than doubled from a 52-week low set in January.

Analysts say comparisons will get tougher for both in the coming quarter, but any sign that shoppers are willing to spend on luxury is welcome.