Software stocks and technology stocks have had an incredible year. Since the pandemic broke out in March 2020, most tech ETFs and tech indices have only headed in one direction. There had been very little in terms of a pullback until recently. The rise in US bond yields caused the stock markets to pull back. There are expectations of higher inflation, and rising yields are a headwind for growth stocks. While many large investors may be moving their funds to other sectors, this could also be a good time to buy promising software stocks of 2021. You might get them at a lower price as compared to where they were just a few weeks ago. One interesting business is VeriSign. It is the most dominant domain registry company in the world. VeriSign plays a part in the registration of .com and .net domains.
VeriSign Is A Moat Business
VeriSign provides routing support to over 170 million domains worldwide. It processes over 230 billion DNS inquiries every single day. VeriSign earns a small fee for its services that add up to a significant amount due to the volume and the numbers involved. VeriSign also operates 2 out of 13 root servers in the world. They are like the backbone of the internet. So, VeriSign is involved with mission-critical processes that enable the internet to run every day. Therefore, the value of its services is high, and its dominant position places the company in a strong position. With many businesses moving online and there being greater digitization of our lives, it is only natural that more domains are going to be registered in the future. So the runway for growth for VeriSign is long. If you are looking for 2021 software stock, then companies like VeriSign tend to make sense.
Towards the end of September, VeriSign’s stock was trading around $205. The price of the stock was corrected by a good 8% as rising bond yields took a toll on tech stocks. Over a 10-year period, the stock is up 625% or more than 7X.