A breakout could be imminent in VeriSign Inc. (VRSN), as the stock approaches a key level of resistance.

VRSN is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net top-level domains. The company also operates two of the world’s 13 root servers that are used to route Internet traffic.

VRSN is benefiting from growth in .com and .net domain-name registrations. While the company has paused price increases for renewals due to the coronavirus pandemic, future price hikes bode well for the company. The company’s application for Internationalized Domain Names (IDN) should also expand its business.

The company has solid liquidity with $1.2 billion in cash as of the end of the last quarter and a 1.2 current ratio. Over the past five years, earnings have grown an average of 22.2%. While VRSN has a negative return on equity, its net margin is 64.2%.

VRSN has a P/E of 31.2, but a high Price to Sales ratio of 20. The stock has shown positive near-term momentum and bullish mid and long-term performance. This has led to a “Strong Buy” rating in our POWR Ratings service and is evident in its price chart.

Take a look at the 1-year chart of VRSN below with added notations:

 Chart of VRSN provided by TradingView

After VRSN plunged in February, the stock embarked on a strong recovery that started towards the end of March. However, the stock has ended up repeatedly stalling at the $220 resistance (blue), and a solid close above that $220 mark should lead to much higher prices for VRSN.

$220 area is also the 52-week high. The possible long position on the stock would be on a breakout above that level, with a protective stop placed under it.

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VRSN shares were trading at $216.74 per share on Wednesday morning, up $0.40 (+0.18%). Year-to-date, VRSN has gained 12.49%, versus a 16.64% rise in the benchmark S&P 500 index during the same period.

About the Author: christian

Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...

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