If you were watching closely on Friday, Apple (NASDAQ:AAPL) stock hit a new all-time high: $120. Adjusted for Apple's most recent stock split, that's $840. The new high was propelled by its record fiscal 2015 Q1 results on Tuesday, which exceeded analyst expectations. While some Apple shareholders may be tempted to take their gains with the stock up 67% in the past 12 months, investors should think twice before they cash out.

Here are three reasons not to sell Apple Stock.

1. Apple's valuation is still conservative.
Before Apple reported first-quarter results, the tech giant's price-to-earnings ratio with the stock at $120 would have been 18.5 -- fairly conservative for a profitable cash cow with growing revenue and earnings. But after taking into account the company's 48% quarterly EPS growth in Q1, Apple's new P/E at $120 is now 16.2. Measured by price-to-earnings ratio, therefore, the stock's 5% jump this week was definitely justified.

Further, at just 16.2 times earnings, Apple stock is starting to look cheap again. Not only is this a low P/E multiple in relation to the recent growth in intrinsic value per share, but it puts Apple well below the average P/E of the broader S&P 500 index, which has a P/E of 19.8. 

Of course, there are other ways to look at valuation beyond P/E. Take your pick: price to sales, price to free cash flow, price to forward earnings -- Apple stock is priced conservatively no matter how you slice it.

2. Repurchases alone will grow EPS meaningfully.
A large part of Apple's EPS growth in recent quarters can be attributed to the company's aggressive share repurchases. To identify the portion of EPS growth attributable to reduced share count between Q1 of 2014 and Q1 of 2015, compare Apple's 48% year-over-year EPS growth to the smaller 38% net income growth Apple reported for the quarter. Ten percentage points of Apple's 48% growth, therefore, can be attributed to share repurchases.

Looking back over every quarter in the past year, there's a similar trend. Apple's share repurchase program alone is boosting earnings by about 8% to 10% every quarter.

Going forward, Apple may very well choose to increase the amount it is spending on share repurchases every quarter. Why not? Apple's cash hoard is at an all-time high of $178 billion, and the company raked in a record $59.7 billion in free cash flow in the last 12 months.

3. Apple's current valuation doesn't include the Apple Watch.
With the Apple Watch just around the corner, investors are beginning to ponder the device's potential. While it's undoubtedly too early to know just how much upside the new device can bring to Apple's business, the company's historical record of launching new products suggests that it's likely that the device will bring at least some upside. But any upside the Apple Watch brings to the company's financials would basically be a bonus. Apple's conservative valuation isn't pricing in any potential beyond Apple's current product lines.

Apple Watch. Image source: Apple.

Could the Apple Watch really add enough value to make a difference anyway? That's tough to say. There are certainly bullish bets on the Apple Watch. One analyst predicts sales of the device will boost Apple's gross profit by almost 5% in fiscal 2015.

The best part about Apple Watch is that, considering Apple's loyal customer base, any negative outcome is very unlikely. On the other hand, any positive outcome isn't priced in -- making accretive earnings from the Apple Watch just icing on the cake.

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.