The No. 1 Reason Apple Is A Buy This Week

Following the herd into the day's most popular stock will get you the same basic profits as everyone else.

Take the hype around Facebook Inc. (Nasdaq: FB) as an example. Between March and July, Facebook stock rose a stunning 41% as eager investors bought shares by the truckload. With the fifth-largest market cap of all publicly traded companies, it's safe to say Facebook is one of the most popular stocks on Wall Street.

But on July 26, Facebook delivered a subpar earnings report that sent the company's stock down as much as 24% overnight, wiping out the profits of investors following the herd.

Thankfully, there is a way to avoid this pitfall and set your own course.

The truth is that finding the next profit opportunity can be easy if you use the Money Morning Stock VQScore™. With the VQScore system, we can not only identify stocks that have great growth potential, we can figure out the perfect time to buy them.

In fact, by using the VQScore system, we've identified a legacy tech company on the verge of breaking out – and generating tremendous returns for investors.

It's making some of the most in-demand devices on the market today, and our system says it's a buy right now. We recommend accumulating shares during pullbacks to help build your stake, but when these stocks reach a VQScore of 4, it'll be the perfect time to buy.

You could end up doubling your money (or better)…

No. 1 Tech Stock On Sale: Apple Inc.

You know all about Apple Inc. (Nasdaq: AAPL), the biggest company on Wall Street with its $900 billion market cap.

But you might not know the company is still severely undervalued, making it a must-own for any investor.

At 42 years old, it's young among legacy tech stocks. It's also the most profitable.

In 2017, Apple generated $229 billion in revenue, raking in over $48 billion of that as profit.

Apple has the resources and stability to not only continuously invest in new projects, but it can also provide investors with reliable returns for years to come.

Apple has three chief strengths that make it one of the best investments available – and one of the most affordable.

First, Apple has a self-sustaining ecosystem of products. The company's four major software platforms provide customers with a seamless user experience across all Apple devices.

This integration locks Apple's customers into using Apple's content services like Apple Music or the App Store and generates significant returns for the company. In 2017, the App Store alone generated $40 billion in revenue.

With over 1 billion Apple devices in daily use, the traction this ecosystem provides ensures that the company will have dependable returns regardless of market conditions.

The second strength is the company's capital returns. For every $100 in sales, Apple is able to create an average of $22 in free cash flow.

Not only does this give Apple a significant edge in capital allocation over its competitors, it's proved a boon for shareholders.

In 2012, Apple implemented a capital return program that gave a portion of this cash to shareholders in the form of dividends and stock buybacks.

Over the last six years, Apple has delivered $234 billion into the hands of shareholders. By 2019, Apple plans to push this to $300 billion.

These distributions not only provide support for Apple's stock price – they also provide investors with a steady stream of dividend income. Apple current yields a hefty $0.73 per share.

Finally, Apple is an absolute bargain compared to its market competition.

Shares of the company currently sell for 14 times earnings. This is incredibly cheap when compared to Microsoft, which trades at 74 time earnings and has a similar market cap.

Apple currently has a VQScore of 3.15. However, if the company's stock price drops or the company accelerates its capital return program, Apple is sure to enter even stronger “buy” territory. And by keeping a close eye on the Apple's VQScore, you can buy it before the company's stock takes off.

Full story (with two more tech stock picks) at Money Morning