Morgan Stanley has good reason to believe that investing in Apple shares is probably a wise idea right now, adding the company to its “Best Ideas” list for stock investments. In a note to investors, analyst Katy Huberty predicted that Apple shares are “set for significant upside” due to high profit margins on the iPhone 6 and iPhone 6 Plus.

While some critics had suggested that the iPhone 6 and iPhone 6 Plus would actually have lower profit margins than the iPhone 5s and iPhone 5c, the change in storage tiers from 16GB/32GB/64GB to 16GB/64GB/128GB has led to more customers purchasing the mid-range tier, spending at least $100 more and thereby improving Apple’s margins.

Apple charges $100 and $200 more for the 64GB and 128GB storage tiers respectively over the standard 16GB model, yet the actual price differences in flash storage for Apple are just a fraction of that. As a result, Apple profits more — and puts a smile on its investors’ faces — when a customer opts to purchase an iPhone with a higher storage capacity.

The chart below shows that stock performance is highly correlated to gross margin, an area that Apple has excelled over the past decade. As the company’s gross margin has risen, the price of its shares has followed nearly an identical path:

Huberty also expects that the Apple Watch, set to launch early next year, will have gross margin skewing closer to the iPhone (40% to 50%) versus the iPad (20% to 30%), which could further bolster Apple’s bottom line and help drive up the price of the company’s shares. Apple Watch will start at $349, but the flagship model could cost over $1,200.

Of course, record-breaking iPhone sales in the first place certainly help. Apple announced last month that it sold 10 million iPhone 6 and iPhone 6 Plus units over their launch weekend, a number that has likely risen significantly since, and pre-orders are estimated to have topped 20 million in China — and the holiday shopping season is just starting.

Swiss investment bank Credit Suisse shares the following group of charts that provide a closer look at how the iPhone 6 mix will contribute to sales and revenue:

AAPL is currently trading at $98.25 per share as of writing.