CAGR is the best formula for evaluating how different investments have performed over time. It helps fix the limitations of the arithmetic average return. Investors can compare the CAGR to evaluate how well one stock performed against other stocks in a peer group or against a market index.
By calculating the CAGR, investors can gain valuable insights into the steady growth of their investments. It takes into account the compounding effect, providing a more accurate representation of the investment's performance.
