WWDC Could Give Undervalued Apple a Boost

NEW YORK ( TheStreet) -- The mystery of Apple's ( AAPL) undervaluation continues.

Here you have a stock selling at 10.5 times its earnings, yielding 2.78% in dividends. It had a solid 10% growth in sales, year over year, in the last quarter, and a balance sheet that's cleaner than a well-run hospital, in a market where the average price-to-earnings ratio for electronic equipment makers is 12.8, and for consumer goods companies 20.58, according to Yahoo! Finance.

Investors are paying more for earnings of Whirlpool ( WHR), which has no growth, a lower yield, and lacks the cash to pay off its long-term debt. Apple, by contrast, is a cash-flow machine, with $30 billion in positive cash flow each quarter.

Would you rather have Apple or Whirlpool? Investors say Whirlpool. It doesn't pay to argue.

You could have argued that Apple didn't care what its stock price was, under Steve Jobs. But Tim Cook has been raising the dividend and buying back stock in great heaping handfuls.

There are two answers to the mystery. One is that Apple's growth rate is slowing, as the industries it created mature. This should mean declining margins over time, and declining profits. The other is that Apple hasn't made anyone say "wow" in several years, and thus investors wonder if it's still innovative enough to keep growing.

CEO Tim Cook gets his chance to address the latter concern today at the company's Worldwide Developer Conference in San Francisco. Since this is the developers' meeting, not a press conference, expectations need to be dialed-down. He's unlikely to say "one more thing," then trot out an iWatch or Apple iTV. That's for later in the summer.

Instead, Cook's expected to announce changes to the company's two main software platforms -- the OS X operating system of the Macintosh line, and the iOS software used by its devices. He will probably also trot out new Macs, since those are the machines developers use.

It's iOS that is most important. The "device revolution" transformed computing from something you paid $1,000 for, and did at a desk, into something you paid less than $500 for, and walked around with. Since then, the interface game has been going every which way, from gestures made in the air to spoken interfaces, and Apple may be the only company capable of delivering clarity to this.

The new OS X, probably code-named Ocelot, will also be premiered, according to most analysts. This is not nearly so important to investors, as it's devices that drive results today, not computers. But developers are the audience here, so geek out.

For investors, the big news should be that Apple is getting far more aggressive in trying to get users to upgrade. MacBook trade-ins have been spiking, according to AppleInsider and Bloomberg reports a new iPhone trade-in program is underway, under which Apple will pay you enough for your old 4S to get an entry-level iPhone 5 with no money down.

You can look at that in one of two ways. Either Apple is doing what it can to improve sales, or the new stuff isn't moving off shelves as fast as it would like.

Developers are also expected to hear of improvements to iCloud and Apple Maps, according to MacWorld, and there are continuing rumors about an iRadio offering, similar to Pandora ( P). But all this is either following existing trends or trying to fix things that should have been done right the first time, according to critics.

Still, I'm getting a 2.78% yield from a company that will spend $50 billion this year buying back shares, raising that yield still further. I can afford to wait for Apple to remake the world. Can Whirlpool shareholders say the same thing?

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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