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Chris Umiastowski is the growth investor for Globe Investor's Strategy Lab. Follow his contributions here and view his model portfolio here.

One of the growth stocks I've selected for my model portfolio in The Globe and Mail's new Strategy Lab is Apple Inc. – you know, the world's biggest company in terms of market capitalization, the giant that value investors always shy away from because of doubts about the ability of any firm to keep on growing at such a rapid pace.

In the face of that skepticism, let me explain why I'm betting on Apple's share price to climb even higher.

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I recently had a casual conversation with an IT consultant. When the discussion turned to Apple, he expressed disbelief that a maker of electronic gadgets could justifiably be the world's largest company. Exxon, he argued, sells a product we all need every day. If oil disappeared for 24 hours the world would end (or so it would seem). But if iPhones disappeared for a day would it really matter?

The problem with this argument – the problem with a lot of the anti-Apple rhetoric – is that it's based on the assumption that people are rational consumers. They're not. Every marketer understands this. People wouldn't eat garbage food or max out their credit cards if they acted on reason alone. Given this, it makes sense to invest in what people think is important emotionally, not what should be important logically.

Few things are now more important emotionally to consumers than the Apple brand. That emotional allegiance (plus a wonderful "ecosystem" of services such as iTunes) allows the company to extract premium prices for its products. As a result, it has become the world leader in transforming mobile computing products into cold, hard cash.

And it's going to get even better. The development of touch screen interfaces and mobile computing has revolutionized Apple's position and positioned it for a future where the traditional computer industry gives way to a tech landscape dominated by tablets and smartphones.

Look at the numbers: Apple sold 115 million iPhones in the last year. The smartphone market is bound to reach billions of units per year. Apple currently has 16.9 per cent of this growing market. It's not rocket science to figure the company will sell a lot more iPhones over the next several years.

I also love how Apple owns the MP3 player market. Sure, iPods don't generate as much profit as smartphones, but they warm up younger customers, getting them hooked on Apple before they can afford iPhones.

On top of all that, Team Cupertino sold 55 million iPads in the last year. By 2015, I'm expecting the tablet market to eclipse the PC market in unit volume. So we're talking about 500 million tablets per year (and still growing). Apple dominates this market with nearly 70 per cent market share. No other competitor even cracks 10 per cent.

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Now think of these market share achievements in comparison to the PC market. For decades, Apple struggled to compete with Microsoft and a laundry list of hardware manufacturers churning out machines using the Microsoft Windows operating system. Its computers could never win more than a small slice of the global PC market.

But now that the battle has shifted to mobile computing and touch screen interfaces? Apple is crushing nearly everyone.

The growth in Apple's Mac sales is now outpacing the growth in Windows PC sales by a wide margin. I firmly believe the adoption of Apple's mobile operating system iOS is prompting people to switch to Mac computers. This trend should continue for many more years.

You can see the shift in the corporate market, where Apple had never been a strong player. With so many executives marching into the office, iPads under their arms, IT departments at Fortune 500 companies are now custom-developing apps for iPhones and iPads.

What we're seeing is nothing short of a turnover in control. Microsoft is now a mature company fighting for relevance in many markets, while Apple is growing, winning and encroaching further into the consumer and business markets every day.

You would think its stock would be expensive. You would be wrong.

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At recent prices just under $700 (U.S.) per share the company is worth $653-billion. Its bank accounts are bulging with $117-billion in cash – roughly 18 per cent of its market cap. Yet the stock trades at only 12.7 times next year's expected earnings per share. Adjusted for cash, that P/E ratio falls under 11 times. The market appears to be assuming that Apple's growth will tail off and is awarding it the same valuation as some boring old utilities.

I beg to differ. Apple is one of the best positioned growth companies in the world. I think the stock is cheap.

See Chris Umiastowski's model portfolio here.

Discuss this article in Globe Investor's LinkedIn group here.

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