CONSTANT GROWTH INVESTMENT STRATEGIES FOR NON-DIVIDEND PAYING LARGE CAP US COMPANIES

This paper evaluated constant growth investment strategies for non-dividend paying large cap US companies. We constructed portfolios based on constant growth expected returns, P/E and PEG ratios. The respective performance of the portfolios over a twenty-year period (1987 ? 2006) was measured and compared to each other and a benchmark (S&P 500). We found that on a risk-adjusted basis, the CGER strategy out-performed the S&P 500 as well as P/E and PEG strategies as it produced the highest Sharpe ratio.