Introduction
Ultimately a stock price rises because either (1) the underlying company's earnings rise, and the multiple stays constant, (2) the share count decreases and all else is constant, (3) the multiple increases, or (4) a combination of the above.
Ideally you want to buy a business whose earnings are growing, its valuation is cheap, and the company generates large amounts of free cash flow ((FCF)) that it uses to buy its stock when the multiple is low. Liberty Global's (LBTYA) (LBTYK) merger with O2, made public a few days ago, could create a scenario