With Apple (NASDAQ: AAPL) stock trading a whopping 67% higher than it was 12 months ago and management gearing up to report second-quarter earnings next Monday, some investors might be tempted to sell shares and take their gains. But shareholders should think carefully before they do so. While it might be difficult to comprehend how a company with a market capitalization over $730 billion could still be undervalued, there are concrete reasons to hold on to this winner for the long haul.

More share buybacks
After returning about $100 billion to shareholders through dividends and stock buybacks since it initiated its quarterly dividend and the world's largest-ever share repurchase program in 2012, it could be assumed Apple's cash hoard would have taken a significant hit by now. But this is far from reality. Not only has Apple's annual free cash flow since the dividend was established exceeded cash outflow for its cash return program, but the company has also borrowed nearly $40 billion in low-interest long-term debt to avoid repatriation taxes.

In other words, the company's cash position is arguably better than ever.

The key point here is that investors shouldn't expect Apple to discontinue its share repurchases and dividends. While Apple's capital return program expires later this year, in the company's first-quarter earnings CEO Tim Cook said Apple would announce an update to the program when it reports second-quarter results. Indeed, Apple's updated capital return program could be at least as aggressive as its predecessor.

A growing dividend
Since Apple began paying dividends, the tech giant has increased its payout two times, by about 15% in 2013 and by 8% in 2014. While Apple's growing free cash flow from 2012 to 2015 alone is a good sign the company will increase its dividend again this year, there's no reason to rely on such an ephemeral indicator for management's plans; the company clearly stated last year it planned to increase its dividend on an annual basis.

"The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world," Apple management said in a press release announcing an updated capital return program last April.

Apple can easily afford to continue to increase its dividend by 8% annually. But with shares trading significantly higher in 2015 than they did in 2013 and 2014, stock repurchases are less enticing and management might opt to be more aggressive with its dividend increase in 2015 than it was last year.

A conservative valuation
Apple still trades conservatively for a dominating, highly profitable industry leader. This is particularly clear when viewing Apple's price-to-earnings ratio in light of its recent earning-per-share growth. Despite meaningful 28% year-over-year EPS growth in the trailing 12 months, the company trades at just 17 times earnings -- a decent discount to the S&P 500's price-to-earnings ratio of 20.1.

Very few market-leading cash cows offer such a promising outlook. Investors should think twice before they sell Apple stock and take their gains.