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Tim Cook is not Steve Jobs. So what?

July 15, 2014: 1:57 PM ET
Why is Apple CEO Tim Cook grinning like the Cheshire Cat? Maybe it's because Apple stock price is once again approaching an all-time high.

Why is Apple CEO Tim Cook grinning like the Cheshire Cat? Maybe it's because Apple stock is approaching an all-time high.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

Investors have had a love-hate relationship with Apple CEO Tim Cook. He is back in Wall Street's good graces for now. It's almost as if investors have gotten him confused with goalie extraordinaire Tim Howard. But with Apple earnings coming out next week, will the romance last?

Here's a look back at shareholders' fickle feelings for the head of the world's most valuable company -- and why traders are iSmitten with Cook and Apple (AAPL) once more.

The market cheered the news that Cook was taking over for the late Steve Jobs in August 2011 -- just a few weeks before Jobs passed away. Cook had been interim or acting CEO three times while Jobs was receiving treatment for pancreatic cancer. As Apple's long-time chief operating officer, he was a known commodity.

The stock continued to soar in the year after Jobs died. It hit an all-time high in September 2012 shortly after the release of the iPhone 5.

But then something happened. Investors started to worry that Apple was no longer innovative. Tim Cook was not as charismatic as Steve Jobs. There was no more Jobs-ian "one more thing" announcement coming at the end of Cook speeches.

What's more, Google (GOOGL) was starting to eat into Apple's mobile dominance thanks to its Android operating system. iPhones and iPads were no longer status symbols. Many consumers were beginning to prefer Galaxy devices from Samsung that ran on Android.

Apple's stock wound up languishing for the rest of 2012 and most of 2013 while Google grabbed the Wall Street momentum.

But Apple has roared back this year. The stock is up nearly 20% in 2014.

And shares are only about 5% below their all-time high. (Adjusting for the company's recent 7-1 stock split, Apple's peak price is $100.72.)

So what's changed? Here are 5 reasons why I think investors have embraced the company. If this story were a Stanley Kubrick film you could title it "Dr. QuickTime or: How I Learned to Stop Worrying and Love Tim Cook."

1. Cook is giving shareholders a lot of cash. Apple's balance sheet is so pristine, it might as well be sponsored by Procter & Gamble's Mr. Clean.

Apple has been using its financial strength ($150.6 billion in cash!) to reward investors with stock buybacks and big dividends.

Buybacks are a good thing when they reduce the number of shares outstanding. That, in turn, helps to lift earnings per share. Apple's share count has been reduced by 6% in the first six months of its current fiscal year.

And Apple's dividend payment yields 2.1%. That's impressive, especially when you consider that a 10 Year U.S. Treasury yields just 2.54%.

Cook astutely realizes (although the prodding by activist shareholders David Einhorn and Carl Icahn probably helped too) that Apple is a maturing company. It has to use some of its cash to keep investors happy. It can't invest all of it back into R&D.

Jobs, the great innovator, wasn't as concerned about keeping Wall Street value investors happy. And he didn't need to since Apple was more of a cultish growth stock during the early days of the iPhone and iPad.

2. Cook is willing to pay up for growth. Under the leadership of Jobs, Apple rarely made any acquisitions. And it never made any big ones.

But the company's decision a few months ago to buy Beats Electronics for $3 billion is a clear sign that Cook is not content to grow Apple solely from within. Beats makes better headphones. And its streaming music service might help boost Apple's iTunes Radio offering.

I think investors are happy to know that Cook is aware that there is talent and innovation outside of Cupertino. The Beats deal signals that Cook may not be done. And that's a good thing, especially as Google, Facebook (FB) and Amazon (AMZN) become even more Apple-like via hardware acquisitions and new products of their own.

3. The stock split is a populist move. Don't underestimate the importance of Apple's big stock split. Even though the split did nothing to change Apple's valuation, it may have made the stock appear cheaper to average investors.

Buying one share of Apple at nearly $650 a share may have seemed daunting to people with little money to play with in the market. The split brought the stock price down to the low $90s. It conceivably could be added to the Dow soon as a result ... and all the recent Dow 17,000 hoopla shows that for many, the Dow still is THE stock market.

And there is something to be said for widening your available pool of investors. I spoke to several happy mom and pop shareholders at Berkshire Hathaway's (BRK-B) annual meeting this May who never would have been able to own a piece of Warren Buffett's company until a 2010 stock split reduced the price of the B share from more than $3500 to about $75. They now trade for less than $130. (The A shares are still for 1%-ers only though -- with a current price of $192,000.)

Related: Berkshire shareholders LOVE Warren Buffett

The Apple split may be doing the same thing for consumers who adore Apple's iProducts but didn't want to spend more for a share of stock than it cost to buy an iPad or Mac.

4. Growth is back on track. Apple is clearly benefiting from the recent struggles of Samsung. Doesn't Cook deserve credit for that in the same way he was blamed for Apple's weakness in 2013? Wall Street analysts have been busy upgrading their price targets and ratings for the stock. And that's because they are boosting their earnings estimates.

Earnings are still, at the end of the day, what drives stock performance. Analysts expect Apple to report a 14% increase in earnings per share when it releases its third-quarter results on July 22. And Wall Street is also more optimistic about the next few years.

Related: Apple fundamentals still attractive following stock split

Analysts have raised their full year earnings targets for fiscal 2014 and 2015 by 4% over the past three months. The consensus long-term forecast calls for about 12% earnings growth a year. That's impressive for a company as big as Apple. And since shares trade for less than 14 times 2015 earnings estimates, the stock still looks attractive. It's even more of a bargain if you think that Apple's earnings could grow even faster .... which brings me to my last point.

5. Apple is still innovative. While Cook may lack the stage presence of Jobs, that doesn't mean that Apple is no longer innovative. It's been easy to criticize Cook for a lack of groundbreaking new products. But Cook is an operations guy, not the tech geek that Jobs was. And other "nerds" like well-respected product gurus Jony Ive and Eddy Cue are still at Apple.

And check out senior vice president of software engineering Craig Federighi. He seems to be the "new" Jobs.

So it should be no surprise that the rumors are heating up again about what's next from Apple. An iWatch seems almost a given at this point. There is increased chatter about how Apple software can become an even bigger part of connected homes and cars ... the so-called Internet of Things.

Related: Excited for iPhone 6? Check out this stock

And don't forget the iPhone and iPad either. Those product lines are not dead yet. The iPhone may soon get its most significant upgrade since the launch of Siri with the iPhone 4S in 2011. It's widely expected that the iPhone 6 will be unveiled in September and will have larger screens and scratch-resistant sapphire glass.

Sure, Apple still has yet to introduce a long hoped for Tolkien-esque one TV set to rule them all. An iTV may only become reality if Apple can work out programming agreements with the big media companies. But don't count Apple out. It did reinvent the music business with iTunes after all.

Of course, critics will note that was when Jobs was in charge. So until Apple releases a truly new (and successful) product line under Cook (i.e. not just bigger iPhones and smaller iPads) then there will still be some iSkeptics waiting for Apple to stumble again.

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