Though the correlation of the price of a common stock and the performance of the underlying company may seem random and fickle over the short term, over the long term, the correlation approaches 100%. That is, over the long term, it is the companies that enjoy the greatest growth in profits that also enjoy the greatest gains in price.

		Companies grow and increase their profits by holding out portions of their earnings each year and plowing them back to expand their businesses. The more profitable their reinvestments, the faster they are able to grow.
		One challenge in common stock investing is, not only to identify companies that are growing, but also to relate the rate and reliability of anticipated growth of that company with the same parameters of all other companies in which we might invest.