(FORTUNE Magazine) – Item No. 1: After an 11-month Internet IPO drought, PayPal, a Silicon Valley company that facilitates payments over the Web, goes public in February. Its stock subsequently surges 107%, making it 2002's top-performing new issue so far.

Item No. 2: Three months later, Netflix, which rents movies over the Web, launches its own IPO.

Item No. 3: Within days, Overstock.com, an e-tailer that audaciously boasts ".com" in its official name, joins the club and begins trading.

Online movie rentals? Payment facilitators? Dot-coms? No, it's not 1999, and yes, the left-for-dead Net sector is showing signs of life. Against the backdrop of a slightly healthier IPO market--the number of new issues is up 24% from the same period last year, according to IPO.com--deal-starved underwriters are testing the market's appetite for Internet issues. "Underwriters are really trying to push anything they think will go," says Kyle Huske, a market analyst at IPO.com.

Overall, the IPO market has done relatively well this year, and this encourages bankers and companies to gamble a bit. The Bloomberg IPO index, which measures the performance of companies' stocks during their first publicly traded year, is up more than 9% year to date--a big jump from the same period last year, when it was down 8%. "When you get some performance from the IPO market, you can start to go out on the risk curve a little," says Jay Chandler, managing director of equity capital markets at Merrill Lynch. Plus, once a company in a given sector launches a successful IPO, others follow. Netflix, for example, withdrew its first filing two years ago because the Internet bubble had burst. But after CEO Reed Hastings saw PayPal's blockbuster debut, he felt the time was ripe: "There's no question we were positively influenced by PayPal--both its IPO and its strong aftermarket performance."

Although Netflix is up only slightly from its offering price, and Overstock.com's stock has fallen 6%, it's clear that attitudes have begun to shift. "Starting in 2000 until now, these companies have been viewed largely as guilty until proven innocent," says Jay Ritter, a professor of finance at the University of Florida. "Now the market is making distinctions." But don't expect a dot-com IPO barrage. Hordes of dot-coms that went public prematurely have since died. Many that are still around--like Google and Hotwire--are choosing to remain private for now. The only pure Net company currently in the pipeline is online travel vendor Orbitz. Among its risk factors: "a history of operating losses" and the expectation to "incur losses in the future." Some things haven't changed after all.

REPORTER ASSOCIATE Julia Boorstin