The Compound Annual Growth Rate (CAGR) is essentially a way to smooth out the ups and downs of an investment's returns to see its average growth rate over a specific period, as if it had grown at a steady pace year after year. It's particularly useful for comparing the performance of different investments over time, as it takes into account the effects of compounding. For example, if a stock's price increased from $100 to $121 over two years, its CAGR would be 10%, reflecting the consistent annual growth rate needed to achieve that final value.