Here's proof stock prices mirror earnings growth over long term

Ritesh Presswalamoneycontrol.comLegendary investor Warren Buffett has a simple approach to investing: pick out companies that offer high earnings growth potential and hold them till as long as it is in place.The logic is simple. A company that compounds earnings at a high rate is bound to deliver high stock price returns over the long term. It is also borne out by the rule of the price-to-earnings ratio. A growth in earnings (the denominator in the ratio) will suppress the ratio -- unlikely if it is a high growth company -- unless the price keeps catching up.We scoured our database to test this equation. Not surprisingly, high earnings growth companies have always delivered high stock returns.The table below lists companies that we filtered for at least 15 percent earnings-per-share growth over the last five fiscal years. The table following it shows the absolute returns that the stocks have clocked over the past five years.Here's the list: