Apple (AAPL)

AAPL

March 25, 2008

My Blue Chip Growth subscribers and I have taken a big bite out of Apple (AAPL)–to the tune of 354% profits since December 2004! Apple is benefiting from traditionally strong computer sales as well as the explosion in digital music, which it dominates with its iPod.

In case you don't know what the iPod fuss is about, just ask a teenager. (By the way, when your teenager starts driving, they'd prefer to have a car that works with their iPod.) Apple also recently exploded onto the cellular scene by introducing its iPhone, a product that was anticipated long before it reached store shelves. And of course, for those of us who haven't hopped onto the latest craze of iPods and iPhones, we best respect Apple for its quality computers. Because they are UNIX-based they are much less vulnerable to computer viruses. Also, Apple's G4 and G5 Macintosh computers, with their Motorola processors, are very adept at processing digital pictures and movies, which are almost as popular as digital music.

The company had a great first quarter, with sales up 34.8% and earnings up 54.4% to $1.62 a share, which was an 8.6% surprise. However, shares sold off more than 10% on cautious second-quarter guidance. Listen, this company always issues cautious quarterly guidance and then posts huge surprises. This stock is mostly about Mac sales, and Apple will continue to capture more market share in the computer world. By the way, that new Leopard operating system is hot–my new Macbook Pro laptop runs on it!

Steve Jobs stirred up a bit of controversy recently when he disclosed that he's been battling a rare form of pancreatic cancer, but hid the news from shareholders for 9 months while he sought treatment. Even while Mr. Jobs takes the time he needs to hopefully reach a full recovery, the company remains in good hands. Analysts are finally starting to figure out that it's Apple's computer sales that will help ensure its future profitability.