Growth Rate of a Stock Calculator

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Stock Growth Rate Calculator (CAGR)

Calculate the Compound Annual Growth Rate and total percentage return of a stock investment.

function calculateStockGrowth() { // 1. Get input values var initialPriceInput = document.getElementById("initialStockPrice").value; var finalPriceInput = document.getElementById("finalStockPrice").value; var yearsInput = document.getElementById("investmentYears").value; var resultDiv = document.getElementById("stockGrowthResult"); resultDiv.style.display = "block"; // 2. Validate inputs before parsing if (initialPriceInput === "" || finalPriceInput === "" || yearsInput === "") { resultDiv.innerHTML = "Please fill in all fields."; return; } // 3. Parse inputs to floats var initialPrice = parseFloat(initialPriceInput); var finalPrice = parseFloat(finalPriceInput); var years = parseFloat(yearsInput); // 4. Handle edge cases (NaN, zero or negative initial values/years) if (isNaN(initialPrice) || isNaN(finalPrice) || isNaN(years)) { resultDiv.innerHTML = "Please enter valid numeric values."; return; } if (initialPrice <= 0) { resultDiv.innerHTML = "Initial stock price must be greater than zero."; return; } if (years <= 0) { resultDiv.innerHTML = "Investment period must be greater than zero."; return; } // 5. Perform Calculations // Absolute Growth ($) var absoluteGrowth = finalPrice – initialPrice; // Total Percentage Growth (%) var totalPercentGrowth = (absoluteGrowth / initialPrice) * 100; // Compound Annual Growth Rate (CAGR) (%) // Formula: ((Final Value / Initial Value)^(1 / Years)) – 1 var cagrDecimal = Math.pow((finalPrice / initialPrice), (1 / years)) – 1; var cagrPercent = cagrDecimal * 100; // 6. Output Results var outputHTML = "

Calculation Results

"; outputHTML += "Absolute Price Change: $" + absoluteGrowth.toFixed(2) + ""; outputHTML += "Total Percentage Growth: " + totalPercentGrowth.toFixed(2) + "%"; outputHTML += "Compound Annual Growth Rate (CAGR): " + cagrPercent.toFixed(2) + "%"; // Add a brief interpretation if (cagrPercent > 0) { outputHTML += "This investment grew at an average annual rate of " + cagrPercent.toFixed(2) + "% over the " + years + "-year period."; } else if (cagrPercent < 0) { outputHTML += "This investment declined at an average annual rate of " + Math.abs(cagrPercent).toFixed(2) + "% over the " + years + "-year period."; } else { outputHTML += "The investment showed no compounded growth over this period."; } resultDiv.innerHTML = outputHTML; }

Understanding Stock Growth Rate: CAGR vs. Total Return

When evaluating the performance of a stock or an entire portfolio over time, knowing the simple price difference isn't enough. To accurately compare investments held for different durations, investors rely on specific growth rate metrics. The most critical of these is the Compound Annual Growth Rate (CAGR).

What is Total Percentage Growth?

Total Percentage Growth is the simplest metric. It tells you the overall percentage change from your buy price to the current price, ignoring the time factor. While useful for a quick snapshot, it can be misleading when comparing a stock held for two years versus one held for ten years.

Formula: ((Final Price – Initial Price) / Initial Price) * 100

What is Compound Annual Growth Rate (CAGR)?

CAGR is the gold standard for measuring investment growth over multiple time periods. It represents the smoothed annualized gain of an investment if it had grown at a steady rate every year. It implicitly assumes that any profits were reinvested at the end of each year.

CAGR is essential because it allows you to compare the performance of different assets on an "apples-to-apples" annual basis, regardless of how long you held them.

Formula: ((Final Price / Initial Price)^(1 / Number of Years)) – 1

Realistic Example

Let's say you purchased a tech stock 5 years ago for $50.00 (Initial Price). Today, that stock is trading at $125.00 (Final Price).

• Absolute Growth: You made $75.00 per share ($125 – $50).
• Total Percentage Growth: The stock is up 150% overall (($75 / $50) * 100).

While 150% sounds fantastic, it happened over 5 years. What was the average annual rate?

Using the calculator above, the CAGR is 20.11%. This means the stock effectively grew by about 20% every single year for five years to reach that 150% total return. This annualized number is what you should use to compare this investment against benchmarks like the S&P 500 or other potential investments.