We’re just two days away from what will almost certainly be a massive e-commerce haul.
Worth an estimated $25 billion, this one-day event is worth more than what the Americans spend on Black Friday and Cyber Monday, two of the nation’s biggest shopping events.
I’m talking about Singles’ Day, an unofficial Chinese holiday that began in 1993 to address the hundreds of millions unmarried people.
And in the last several years, November 11 has become a de facto shopping holiday sponsored by web giant Alibaba Group Holding Ltd. (Nasdaq: BABA).
Now, most tech analysts would be suggesting you capitalize on this by investing in Alibaba or another Chinese web giant.
But here at Strategic Tech Investor, we go way beyond the headlines to give you analysis you won’t find anywhere else.
That’s why today I want to show you a way to invest in the much larger global e-commerce trend, one that is worth $9.6 trillion in the United States alone.
This American “quiet giant” generates $600 million in cash every year – which goes right back into investors’ pockets.
It’s the landlord to the entire web.
And it just got the go-ahead to raise rents.
That means its shares are set to soar – and crush the overall market.
This Dot-Com Boom Isn’t Going Bust
Let’s clear something up right off the bat. The term “dot-com” still carries a very negative connotation for a lot of investors.
After all, it was the “dot-com” crash that wrecked the Nasdaq Composite back in March 2000. Before hitting bottom, the tech-centric index lost up to 90% of its value.
Since then, technology – and, therefore, the Nasdaq – has more than made up for it. Silicon Valley has become the single biggest driving force in wealth creation and the stock market’s historic advance since March 2009.
And yes, the .com suffix has played a big role in it all. Think of a major U.S. company that doesn’t have a web address ending in .com… or about the thousands of investors who made a killing over the last 20 years from Amazon.com Inc. (Nasdaq: AMZN).
Almost 20 years ago to the day, Amazon closed at $21.29. It recently reached a high of $2,039.51, for a total return of 9,479%.
Even traditional retailers are cashing in on the value of having a dot-com address for online shopping. In this year’s second quarter, Wal-Mart Stores Inc. (NYSE: WMT), the world’s largest brick-and-mortar store chain, crushed its earnings after online sales jumped 40% in a single year.
As exciting as those two examples are, they’re just small pieces of the overall value of web-based buying and selling.
Consider that iGillottResearch Inc. says web transactions account for roughly half the nation’s gross domestic product (GDP).
Not only that, but the research firm is predicting a 65% growth in the value of U.S. web transactions through 2022. During that period, the value will rise from $9.6 trillion yearly to $14 trillion.
Cleary this is a massive trend that savvy tech investors ought to be targeting.
The $20 Billion Quiet Giant
And you can do that by investing in a supplier firm that until recently most investors had heard very little about. Then again, this is a $20 billion market-cap company that is largely off Wall Street’s radar.
Here’s why I say it’s a “Quiet Giant.”
Despite the firm’s size and its growing global impact on the web economy, it garners coverage from just five Wall Street analysts. By contrast, 41 analysts follow Amazon.
But I believe all that’s about to change.
That’s because Verisign Inc. (NYSE: VRSN) just crushed the market at a time when tech and other growth firms have come under pressure.
On November 2, shares soared an amazing 17% after Verisign got a 7% increase in the “rent” it can charge the hundreds of thousands of companies that use the .com suffix for their websites.
Let me explain…
Building a Web Presence
This Reston, Virginia-based firm is the first point of contact for any firm or person that wants to build a web presence. Nearly 152 million website names and addresses are currently registered with Verisign.
Its list has been steadily growing since 1993, when Verisign landed a massive contract from the federal National Science Foundation (NSF).
Around 90% of those registered domains end in .com, although Verisign has been handling rising demand for .net addresses in recent years as well.
The firm signed a deal with iCANN (The Internet Corporation for Assigned Names and Numbers) last year to serve as the exclusive provider of .net registrations through 2023.
Handling all of these websites isn’t a simple process. Verisign’s systems must act as a traffic cop, ensuring that misdirections and bottlenecks don’t bring the internet to a standstill.
Just a few years ago, investors grew concerned that Verisign would lose its exclusive role as a .com server registrar. But those concerns were put to rest in July 2016 when iCANN renewed its .com contract with Verisign through 2024.
Sites ending in .com or .net account for 43% of all websites in the world.
$600 Million in Your Pocket
Make no mistake, this is a very lucrative business model.
Every year, Verisign generates more than $600 million in excess cash. And almost all of that money is being returned to investors.
In 2017, for example, Verisign bought back $593 million of its own stock. And the firm is on pace to buy back even more shares this year.
In fact, that level of profits – and shareholder perks – are poised to spike higher.
That’s because Verisign has just been given the green light to push through some much-delayed price increases. Under a newly signed deal with iCANN, Verisign can raise prices up to 7% per year in each of the final four years of the firm’s current exclusive contract.
For the past six years, that price had been stuck at $7.85 per year per web address. All of that extra income will now flow straight to the bottom line. Better yet, Verisign won’t need to boost its spending for what is mostly an automated business.
The timing here is great. Verisign had been overseeing a cybersecurity unit but recently decided instead to focus on its core website registration business.
A few weeks ago, the firm announced plans to sell its Security Services unit to Neustar Inc. for $125 million. That cash will be used to strengthen the firm’s core business, or to step up the current rate of share buybacks.
Add it all up and you see that Verisign has a very profitable moat we can count on for years to come.
Simply stated, Verisign is a stock you want to put in your portfolio for the long haul.
That way you’ll profit from Singles’ Day this Sunday… and the web’s growing economic impact for years to come.
And once you’re done with that, there’s one more thing I want you to do before the weekend gets going…
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