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Why Apple Inc.'s iPhone Sales Will Continue to Grow

By Daniel Sparks - Mar 26, 2014 at 5:30PM

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If Apple's iPhone business is poised for more growth, is Apple stock undervalued?

Apple ( AAPL 3.55% ) is conservatively valued, with a price-to-earnings ratio of just 13. Even more, it could be argued that the market has priced the company for zero net income growth going forward. But does a valuation this conservative make sense in light of continued opportunity for Apple's largest and most profitable business segment?

Apple's iPhone business accounted for 56% of its fiscal 2014 first-quarter revenue, and an even larger portion of is operating profits. As such a large portion of Apple's business, the segment will probably be the biggest driver for Apple stock in the coming years -- even with new product categories on the horizon. Fortunately, several factors point to more growth for the business.

As Fool contributor Daniel Sparks points out in the following video, a growing iPhone business could make the stock undervalued at today's prices.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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