Louis Navellier, editor of Blue Chip Growth, explains why he returns to an old favorite that’s firing on all cylinders.

I had been sour on Apple (Nasdaq: AAPL) for the last year or so because technology in general had fallen out of favor during the recession. On top of that, the market was overly concerned with the health of chief executive officer Steve Jobs. Lastly, I was not that impressed with Apple's previous quarterly earnings in late 2008 and early 2009.

However, since then, iPhone sales have accelerated and Apple's earnings momentum increased with its most recent quarterly earnings announcement. Apple reported a 46% increase in its fiscal fourth-quarter earnings thanks to strong sales of iPhones, Mac computers, and iPods. AAPL earned $1.67 billion, or $1.82 a share, on revenue of $9.87 billion.

During the same period a year ago, Apple earned $1.14 billion, or $1.26 a share on $7.9 billion in sales. Apple's results topped forecasts of $1.42 a share on revenue of $9.2 billion with a stunning 28% earnings surprise and a 25% sales surprise!

It's easy to see why Apple is leading the tech revolution. The company's iPod and iTunes lead the digital music industry, and the iPhone is one of the hottest smart phones out there. AAPL also hasn't forgotten its personal computing roots and has cut into the dominance of Windows with its OS X operating system and fleet of Mac computers.

Sales of the iPhone have accelerated recently, so I expect Apple's earnings to gain momentum. Additionally, if Apple upgraded its laptops with solid-state drives and other weight-saving tricks, it would gain even greater market share. A larger MacBook Air with 15-inch or 17-inch screens would be a red-hot item if consumer sentiment improves over the next several months.

Apple's most encouraging trait of all is its international appeal. Due to new contracts and a booming Asian market for smart phones, Apple could add 20.3 million additional iPhone shipments by 2011. That's a huge boost to the bottom line.

In the interim, it appears that the market is no longer on pins and needles over the health of CEO Steve Jobs. Also, the analyst community remains impressed with the iPhone's growing market dominance, and institutional buying pressure is really gathering behind shares.

Recently, a UBS analyst upgraded Apple to "Buy" from "Neutral" and raised his target price on the shares to $265 from $170. (It closed below $204 Friday—Editor.) As exclusive contracts expire and emerging Asian markets are conquered, Apple could enter one of the most profitable periods in its history very soon.

In the past three months, the analyst community has revised its consensus earnings estimates 8.6% higher for AAPL, which usually precedes future earnings surprises. Apple has averaged a 13.4% earnings surprise in recent quarters, so I expect a strong trend of earnings surprises from this company for many quarters to come. The stock is a great buy for the recovery.

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