(MONEY Magazine) – NEW YORK--Some apples look downright scrumptious--even though worms may be lurking inside. For example, take Apple Computer, the $9 billion personal-computer maker. Apple looks terrific. From its June low of $24.50, the volatile stock has soared 62% to $39.75 as of March 6. The reason: a huge 258% earnings gain last year, with forecasts of another 76% boost, to $4.60 a share, this year. However, you get a different slice on Apple reading its recent 10-Q and 10-K filings with the SEC. Those earnings reflect a number of nonrecurring items. Without these extras, Apple's 1994 earnings would have declined 67%, and its first quarter '95 income would have risen by 62%, not the reported 356%.

What's more, the SEC filings suggest more problems ahead, including pressures on company profit margins.

Start with '94. The 10-K shows Apple's research-and-development spending--an essential ingredient in a technology company's future--fell by $100 million from a year ago, thereby boosting earnings 50¢ a share. A $250 million cut in general expenses tacked on another $1.25. And another 62¢ came from a reserve against future restructuring costs. In all, without those nonrecurring factors, Apple's earnings last year would have been a mere 24¢ a share, rather than the $2.61 it reported.

Now look at Apple's $1.55-a-share first quarter. A full $1 of that came from mostly nonrecurring factors, including 55¢ from a hefty increase in pretax profit margins that Apple's 10-Q admits the company may not be able to sustain. The 10-Q also says results benefited from currency fluctuations and an initial sales surge of its $1,800 to $2,000 Power Macintosh computers. And lower R&D spending added another 22¢--a bonus that will diminish as Apple steps up R&D later this year.

In addition, between Sept. 30 and Dec. 31, Apple's computer backlogs barely increased, going from $663 million to $670 million. One possible reason: flat sales.

A veteran balance-sheet expert familiar with Apple's recent 10-Q and 10-K reports, who requested anonymity, estimates the company's basic earnings power at between $1.50 and $1.75 a share. Given those earnings, plus a price/earnings multiple above key rivals of about 15, he says the stock will fall over the next six to 12 months to around $25, a 37% decline. His advice: Don't nibble at Apple; it could be rotten.

Apple's response? A spokesman claims the company is in an SEC-mandated "quiet period"-meaning that it is not allowed to discuss earnings until after its fiscal second-quarter results are issued in late March.

I haven't heard that phony excuse in years.

WHY HIGH-TECH MAY STAY HIGH IN '95

Apple aside, will high-tech lead the market again in '95 after nifty gains of 17% in '93 and 33% in '94?

The answer is yes. That's the word from Michael Murphy, the editor of California Technology Stock Letter. "Ignore any ifs, ands or buts,'' he says. He sees lusty earnings growth of 15% to 20% or more in the March and June quarters, vs. a year ago. Then, following tech's usual flat third quarter, "it'll be gangbusters again in the fourth quarter.''

Sounds too good to be true. But, fact is, Murphy's model portfolio has beaten the Wilshire 5000 stock index in the past one, three, five, eight and 10 years. The only other letter that's matched it: Value Line Investment Survey.

CHIQUITA LOOKS RIPE FOR GAINS

I love golden bananas. But some Wall Street pros say I'd be better off with a battered banana stock, Chiquita Brands, the world's largest banana producer with $4 billion in sales. They claim Chiquita could make one of the sweetest comebacks of '95, after losing money the past three years. The stock was at $13.25 on March 6, down a sickening 74% from its '91 peak of $50.75. "Chiquita's next move is up," says John McMillin, a Prudential Securities analyst. "But don't ask me when.''

Two other analysts and two money managers insisted the time to buy is now. They think the stock could climb as much as 87% to $25 in 12 months, in spite of its highly leveraged balanced sheet carrying $1.5 billion of debt.

Latin American banana producers, including Chiquita, have suffered since mid-'93, when the 14-nation European Union forced them to reduce imports and share profits with European partners. But U.S. trade representatives are pushing to ease the restrictions and the profit sharing. With European banana sales accounting for about 40% of Chiquita's revenues, any signs of European concessions could send the stock flying, perhaps by as early as midyear.

How tasty could Chiquita's get? That's tough to say. Depending on Europe, some bulls say it could earn as much as $1.50 to $2 this year and $2.70 to $3 next year.