Apple Incorporated (AAPL) designs, manufactures, and sells personal computers, portable digital music players, and mobile communication devices, as well as related software, services, peripherals, and networking solutions worldwide. The company has over 215 retail stores. The company is headquartered in Cupertino, California and was founded in 1976.

The company has great fundamentals with very strong free cash flow and solid return on equity. Apple recently posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion, or $1.78 per diluted share. These results compare to revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, equal to the year-ago quarter. International sales accounted for 46 percent of the quarter's revenue.

In addition, many Wall Street analysts are predicting a major upgrade to AppleTV. The Apple-connected television set, which is like iTunes built directly into a Web-connected screen, is seen to be a potential moneymaker in the coming years. Specifically, the online movie rental feature is attractive to consumers They forecast that Apple will sell 6.6 million AppleTV units this year, which could increase the company's earnings-per-share up by more than 18 cents for the year.

The underlying equity is showing a solid Elliot Wave-5 buy formation, projecting gains into the $132 per share area over the next 4 to 6 months. Apple Computer has a very liquid options market. The options currently extend through January of 2011, allowing the options trader more than enough time to take advantage of the relatively long-term forecasted opportunity.

Figure 1: Daily Elliott Wave-5 Buy Formation for Apple Computer
(Source: Profit Source)
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Happy Trading.

Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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