Verisign Looks to Extend Pre-Holiday Win Streak

Heavily shorted VRSN outshines its fellow tech stocks this time of year

Mar 22, 2018 at 12:46 PM
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Domain name giant Verisign, Inc. (NASDAQ:VRSN) looks set to pop next week, if history is any indication. According to Schaeffer's Senior Quantitative Analyst Rocky White, VRSN is one of only three S&P 500 Index (SPX) stocks that boasts a 100% win rate during the holiday-shortened Good Friday week, looking at returns from the past decade.

What's more, of those three standout stocks, VRSN sports the highest average return for the period of 2.2%. And notably, Verisign is the only tech-sector name on the list of top 25 S&P stocks for next week.

Heading into this year's pre-Easter week trading, VRSN already looks strong on the charts. The stock is fresh off its March 16 multi-year high of $127.24, and just pulled back to short-term support at its 10-day moving average. Key support from this trendline -- along with its 40-day, 80-day, and 160-day counterparts -- has guided VRSN to a gain of about 20% over the last six months.

vrsn daily chart 0322

A burst of short-covering support could help Verisign stock extend its perfect seasonal record next week. A steep 18.4% of the stock's float is dedicated to short interest, representing 11.7 times VRSN's average daily trading volume. This leaves the equity well-positioned to capitalize on an influx of buying pressure as these shorts throw in the towel.

Overdue bullish brokerage notes could also propel VRSN higher. Not one of the four analysts tracking the stock calls it a "buy," and the average 12-month price target of $113.25 stands well below the equity's current price.

Speculative players looking to bet on another short-term bounce from VRSN will want to keep their time frames tight, as the company's first-quarter earnings report is due out just after April options expiration. As a result, front-month VRSN options are pricing in implied volatility of around 26%, compared to nearly 28% out in the May series.

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