TITLE:
PE Growth and Risk: Evidences from Value Investing in Thailand
AUTHORS:
Paiboon Sareewiwatthana
KEYWORDS:
Value Investing, PE, PEG, PERG, The Stock Exchange of Thailand
JOURNAL NAME:
Technology and Investment,
Vol.5 No.2,
May
15,
2014
ABSTRACT:
This study employed
the concept of value investing, whereby PE, PEG, and PERG ratios were used for
stock screening. PE is the basic price to earnings ratio; while PEG is the PE
with growth incorporated. PERG is the PEG adjusted for risk factor. The
concepts based on the hypotheses that stocks with low PE ratio, low PEG, and
low PERG should generate higher returns than those of the market average. Data
from the Securities Exchange of Thailand during 2002-2012 were used to test the
hypotheses. Returns from portfolios with low PE, low PEG, and low PERG were
computed and found to be better than those of the market average. Proxies for
risk, the standard deviation of return and the beta coefficients, were used to
computed PERG. Portfolios of low PERG
using Standard Deviation as risk proxy appeared to provide better performances
than those of using beta coefficient. All in all, PE appeared to be the best
screening, providing the highest returns during the period tested.