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Apple (AAPLFree Apple Stock Report) shares are back in a strong rally mode, rising above the $210-per-share mark, on the heels of the tech giant's earnings release for the second quarter of fiscal 2019 (year ends September 28th). The Dow component had been under heavy pressure early in the year, falling into the $140s, with investors worried about a slowdown in the core iPhone franchise and challenging operating conditions in China. But Apple continues to diversify its business, recently introducing a new subscription video service and branded, Goldman Sachs-backed credit card. And the situation in China looks to be getting better, with the U.S. and China reportedly moving closer to a trade truce.

In the meantime, the March-interim results showed good progress, suggesting that the company's diversification efforts are beginning to pay off in earnest. For the period, share net came in at $2.46, nicely ahead of our $2.32 call and Wall Street's consensus view of $2.36. While iPhone sales declined 17% year over year, to $31.1 billion, reflecting a maturing of the global smartphone market, demand finally appears to be stabilizing. What's more, other segments, including Services and Wearables, Home and Accessories, are exhibiting robust growth.

The high-margined Services unit (where revenue was up 16%, to a record $11.5 billion) is benefiting from deeper penetration of things like iCloud storage and the Apple Pay digital wallet, a testament to the company's ability to monetize its huge installed base of over 1.4 billion active devices. And the Wearables segment (where revenue surged around 30%) is benefiting from product innovations that seem to have been flying under the Street's radar. In particular, new health-related applications are driving sales of the latest-generation Apple Watch, and AirPods wireless headphones continue to be a smash hit.

Looking ahead, we expect these divisions to only gain in importance, and for the cash-cow iPhone line to get a lift from improvements in China and a more value-oriented pricing strategy. With these factors in mind, and given the solid March-period performance, we are raising our share-earnings estimates for fiscal 2019 and fiscal 2020 by $0.10 and $0.50, respectively, to $11.50 and $13.00. These tallies may even prove to be conservative if the company, which just increased its repurchase program by $75 billion and hiked its quarterly dividend by 5% (to $0.77 a share), stays aggressive on the stock-buyback front.

Despite the recent surge, we still like this Dow name for the conservative buy-and-hold crowd. Indeed, even at current levels, we think the stock will provide patient investors with healthy risk-adjusted returns over the pull to 2022-2024.

About the CompanyApple Inc. is one of the world’s largest makers of PCs and peripheral and consumer products, such as the iPod digital music player, the iPad tablet, the iPhone smartphone, and the Apple Watch, for sale primarily to the business, creative, education, government, and consumer markets. It also sells operating systems, utilities, languages, developer tools, and database software.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.