Investment bank Morgan Stanley told investors — as reported by “AppleInsider” ( that Apple may return some of its US$76 billion in cash to shareholders and recommended either share buybacks or dividends as the most favorable options.

Analyst Katy Huberty told investors that this cash pile represents 22% of its market capitalization. Of that amount, roughly $29 billion, as of the second quarter of calendar 2011, is held in the U.S., while $24 billion in foreign cash is believed to be eligible for repatriation without additional tax expenses, says “AppleInsider.”

Apple has lately been accruing U.S. income tax on about half of its foreign income, a rare move for corporations, according to Huberty. “We believe Apple is the only company in our coverage to accrue such a significant portion,” she told investors.

If the company chooses not to return cash to shareholders, Morgan Stanley predicts Apple’s cash balance will grow 58% year-over-year to $94 billion by the end of the year, and to $136 billion by the end of 2012. My take: Apple won’t issue the cash, but will continue to build a “war chest” for acquisitions and increased research and development.

— Dennis Sellers