It’s one of the best ideas we’ve ever had…

Starting in 2005, I began recommending shares of big blue-chip companies, most of which happened to be the No. 1 companies in their industries.

As many people know, we now call them “World Dominators.”

Buying these safe blue-chip stocks when they are trading at dirt-cheap levels is a “can’t miss” opportunity.

[ad#Google Adsense 336×280-IA]We’ve recommended glaringly dirt-cheap stocks that just kept winning and winning and winning…

And every now and then – when there was some bad news about one of these stocks – I told readers NOT to sell… to just keep buying (or holding, as the case may be).

The strategy worked out well for us…

But the World Dominator strategy has become more popular in our industry (along with equities in general) over the past few years.

The Dow Jones Industrial Average, which contains several World Dominators, is up about 60% since July 2005. Our first World Dominator pick, Berkshire Hathaway (BRK-A), is up over 120% in the same time.

It’s getting very difficult to find new large-cap, high-quality names trading at cheap prices these days…

But there’s still one World Dominator that looks like a screaming bargain right now… In fact, I think its share price should be about double where it is today.

Let me explain…

Apple (AAPL) is the World Dominator of consumer electronics. It’s the No. 1 maker of mobile-computing devices in the world. It reinvented recorded music, phones, and computers with iTunes and the iPod, iPhone, and iPad. Now, it makes the highest-quality, most-loved products in each of its two major categories (smartphones and tablets).

Apple reported second-quarter sales last week of $45.65 billion, up 5% from the same quarter last year. That’s a new record for Apple’s second fiscal quarter. The company sold 43.7 million iPhones.

Apple announced last December it had reached a deal with China Mobile, the largest cell-phone provider in China. China Mobile has more than 700 million subscribers. The deal looks like it’s paying off. Apple did $9.3 billion in sales in the Greater China region (including Hong Kong and Taiwan), up 5% from last quarter and up 13% from the same period last year.

Apple is doing a better and better job of returning capital to shareholders… It increased its share-repurchase program from $60 billion to $90 billion and raised its dividend 8%.

Apple expects to return $130 billion to shareholders by the end of next year. It expects to spend the bulk of that money on share repurchases. When a company repurchases shares, it increases the value of the remaining individual shares. It’s like slicing a pizza into eight pieces instead of 10 pieces. Each piece is bigger.

Apple pays out about $11 billion a year in dividends, making it one of the biggest dividend-payers in the world. It’s a fantastic brand-name business with growing legions of fanatical customers and increasing dividends. This is the kind of stock that should make up a large percentage of your portfolio.

Apple CEO Tim Cook says he sees “tremendous value” in the company’s stock today.

I recommended Apple shares to my Extreme Value subscribers last June. It was trading for around $440 per share.

Back then, the annualized dividend yield was about 2.7%. After the recently announced dividend increase, you’d be earning about 3% on your original purchase price.

If you stick with Apple’s stock for five to 10 more years, you’ll earn 5%-plus on that original purchase price. And you’ll have earned substantial capital gains.

I don’t predict share prices, but based solely on the value of the business, Apple’s share price should be about double where it is today.

Lots of folks worry about Apple’s competition from Samsung. I don’t. One, the Apple brand is stronger and more valuable than Samsung. Two, a recent Wall Street Journal article said Apple spends about $50 less per unit for mobile-phone components than Samsung does (not including software and licensing fees). Multiply that by millions of units sold, and Apple is making a lot more money than Samsung.

Apple shares have jumped 13% in just over a week. But they’re still cheap today, at an enterprise value (market cap minus net cash) of just over eight times trailing free cash flow. It’s still a fantastic buy today. A great business like Apple can easily trade for 16 times trailing free cash flow.

Investing doesn’t get much easier than buying Apple at current prices and forgetting you own it. We’ve made a lot of money in Apple. But it’s still cheap… which means we’ll make a lot more in the coming years.

Good investing,

Dan Ferris

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Source: DailyWealth