(AAPL) - Get Report

should feel proud because


(MSFT) - Get Report

will be emulating its hugely successful chain of retail



But as is the case with companies dependent on the diminished spending power of consumers, Apple's stock is still best approached with a healthy degree of caution.

Even the continuing popularity of Macs, iPhones and iPods won't provide Apple immunity from the current economic contraction, analysts warn. The consensus estimate is for Apple's per-share net profit to dip to $5.20 this year from $5.26 in fiscal 2008 (ended in September) before recovering to $5.97 next year. As can be seen in the accompanying table, Apple's net for the 12 months ended Dec. 31 was $5.39.

With Apple's growth prospects muted by the worldwide economic downturn, Ratings' quantitative model evaluated the stock's price-to-earnings ratio of close to 20, based on this year's estimated net, and its recent level of nearly four times book value per share, and assigned the stock a "risk grade" of D-plus.

However, Apple's ability to remain profitable during the recession and its anticipated return to growth next year prompted the model to give it a "reward grade" of B on its grade scale that ranges from A-plus to E-minus. The stock's overall grade from Ratings is a C-plus, which equates with a "hold" recommendation but remains just one notch away from "buy."

Concerns about the health of Apple's iconic CEO, Steve Jobs, remain a factor influencing the firm's stock price. Last month, the visionary leader announced he was taking a medical leave until the end of June, saying health-related issues "are more complex than I originally thought." Jobs added, however, that, "as CEO, I plan to remain involved in major strategic decisions while I am out."

Analysts and Apple aficionados have speculated about his health in recent months after observing Jobs at public appearances. They have commented on his weight loss and voiced concern about how long the pancreatic-cancer survivor might continue to lead Apple.

Apple's stock, which floundered in the $6 to $7 range around 2002 and 2003, rocketed to $200 in 2007. The shares tumbled to the low $100s and rebounded above $190 last May. Since then, Apple's price has fluctuated in the $80 to $105 range.

Chief Operating Officer Tim Cook will be in charge of Apple's day-to-day operations during Jobs' absence. In addition to heading the Macintosh division, Cook is responsible for all of the company's worldwide sales and operations, including end-to-end management of Apple's supply chain, sales, and service and support in all markets and countries.

Cook joined Apple from Compaq, now part of


(HPQ) - Get Report

, and previously worked for 12 years at

International Business Machines

(IBM) - Get Report

, where he led manufacturing and distribution functions for IBM's Personal Computer in North America and Latin America.

An industrial engineer with an MBA from Duke University, Cook has been lauded for his management style and operational effectiveness. Nonetheless, observers wonder if he can maintain the Jobs vision that has broadened Apple from computer hardware and software to leadership in entertainment and telecommunications devices.

Richard Widows is a senior financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.