APPLE INC. $501 - Nasdaq symbol AAPL

APPLE INC. $501 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 892.4 million; Market cap: $447.1 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.4%; TSINetwork Rating: Average; www.apple.com) continues to profit from its hugely popular mobile devices: the iPhone smartphone and the iPad tablet computer. These products account for 75% of its sales. The remaining 25% comes from its Mac computers, iPod music players and revenue from its iTunes online store.

In its 2014 first quarter, which ended December 28, 2013, Apple’s sales rose 5.7%, to $57.6 billion from $54.5 billion a year earlier. The company sold a record 51.0 million iPhones in the latest quarter, up 6.8%. iPad sales gained 13.9%, to a record 26.0 million units. Apple also sold 19.1% more Mac computers, but iPod sales fell 52.3% as users continue to upgrade to iPhones.

However, Apple is paying more for components after it upgraded its iPhones and iPads in 2013. As a result, its earnings were unchanged at $13.1 billion. Earnings per share rose 5.0%, to $14.50 from $13.81, on fewer shares outstanding.

Higher spending on product development also slowed earnings growth. Apple’s research costs jumped 31.7% in the latest quarter, to $1.3 billion (or 2.3% of sales) from $1.0 billion (or 1.9%) a year earlier.

Apple holds cash and investments of $158.8 billion, or $177.98 a share, and its long-term debt is just $17.0 billion.

Activist investor Carl Icahn owns about 1% of Apple and wants it to spend more on share buybacks. In April 2013, the company increased its repurchase authorization from $10 billion to $60 billion. Since then, it has spent $28 billion on buybacks. It expects to complete the remaining $32 billion of these purchases by December 2015.

The company will probably earn $43.69 a share in fiscal 2014, and the stock trades at just 11.5 times that estimate. However, Apple faces increasingly strong competition from cheaper mobile devices, particularly in China and other developing markets. The $12.20 dividend yields 2.4%.

Apple is still a hold.

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