Bill Nygren, whose Oakmark and Oakmark Select funds are both in the top 2% of their category over the past decade, thinks stocks could double in the next five years — even if the economy shows zero real growth.

“I don’t for a minute concede that we are condemned to that [economic] future,” Nygren writes in a column for Morningstar.com, “but for kicks let’s run the math. If annual inflation is 1.5% and real growth is zero, then corporate sales and profits probably average that same 1.5% growth rate. In a no-real growth mode, companies won’t need to spend much more than depreciation, which leaves them with an after-dividend free cash flow yield of about 6%. With corporate balance sheets already cash heavy, let’s assume excess cash is simply used to reduce shares outstanding.”

Under such a scenario, in five years corporate earnings would be up 8%, common shares outstanding would have declined by 27%, and EPS would be up 47%, Nygren says. With the S&P 500’s current P/E ratio at about 11 using estimated 2011 earnings, Nygren says a rise in P/E to the long-term average of 15 would mean the S&P would about double in five years. And, with the index currently yielding 2.2%, it would also have provided dividend income greater than the interest income from a five-year Treasury, Nygren adds. “That’s not too shabby for an economic backdrop that I believe is much too pessimistic,” he writes. “Of course, things could always get worse, but with stock prices appearing so depressed, the bears need to come up with more imagination than that.”