With share prices climbing, Apple(NASDAQ:AAPL) investors have been rewarded handsomely by the company's recent capital returns program and decision to split the stock. There may be more upside to come. The share buyback program coupled with newer products in the latter half of 2014 will drive Apple's stock price higher.

Heightened capital returns
Apple's decision to ramp up its share repurchase program to more than $90 billion was cheered by Apple shareholders, as the company will dramatically reduce its outstanding share count. At the end of last quarter, the company still had $44.1 billion dollars left from that share repurchase authorization yet to be executed. 

Apple has $150.5 billion in cash and securities on its balance sheet, but the major portion of it is tucked away in foreign markets which totaled $132.2 billion at the end of last quarter. And as a result, the company stated that it will issue bonds in the U.S. and abroad to fund its out-sized share buyback plan to avoid paying repatriation taxes in the U.S. Apple also notched up its quarterly cash payout to shareholders to $3.29, which is a great plus for dividend-yield seeking investors. 

Recently, Apple raised $12 billion in U.S. denominated debt to fund its capital returns program. And leveraged share repurchases for a company with an inexpensive valuation is a great way to create value for longer term shareholders. 

And Apple's stock split which just took place will aid the company to attract a whole lot of new investors who prefer to buy lower priced stocks. Stock splits do not have any fundamental impact on a company's stock price, but sometimes see the price of the stock go higher due to breaking down the company's shares into smaller pieces.

But the biggest impact on Apple's stock price continues to be its share repurchase program. Apple had 948 million diluted shares outstanding at the end of its September 2012 quarter, and the company ended last quarter with 879.5 million diluted shares, or roughly 6.2 billion shares post-split. This large reduction in share count will boost the company's EPS further, as a large part of the share repurchase plan hasn't been utilized yet. 

Valuation should move higher
Apple saw its gross margins rise to 39.3% in the last quarter, and guided to 37%-38% for the current quarter and that was an improvement from the prior few quarters. The company's EPS grew 15% in the last quarter, and in the June quarter analysts are anticipating a 14% year-over-year increase in EPS. These positive trends will fuel Apple stock higher as investors are anticipating new Apple products in the second half of 2014. 

Recently BMO Capital Markets increased its price target for Apple shares to $685 from $610. The firm cited that its expects Apple to release a larger screen iPhone which will appeal to more consumers. If Apple releases a larger screen iPhone the company can win over some of the Samsung based users running on Android. 

Devices running on Google's(NASDAQ:GOOG) (NASDAQ:GOOGL) Android have come out rapidly with large screen phones and gained wide-spread consumer acceptance worldwide. Android's market share in the last quarter stood at 81.1% which was an increase from the year-ago quarter when its market share stood at 75.3%, according to IDC. 

If Apple's iPhone 6 features a larger screen, that might be a material driver of the company's revenues in the near term. In addition, Apple is growing its revenue streams with the acquisition of Beats which will not only make the company's hardware accessories business stronger, but also enable Apple to grow the music subscription business of Beats. 

The bottom line
Apple's stock price should see more upside as the company continues to grow its revenues across the world. Apple's stock-split and share buyback program have already yielded very good results for investors, as evidenced by the recent rally in Apple's stock price. However, there might still be more upside left in Apple's stock price as the company introduces newer products.