Which High-Conviction Stock Picks Are Set to Soar in the Coming Years? Amazon (AMZN) Is One.

Key Points

• Each of these companies has an impressive track record and promising growth potential.

• Each could help a long-term portfolio grow.

• Consider a fast-growing ETF or two, as well.

• 10 stocks we like better than Amazon ›

It's a question many growth-stock investors often ask themselves: Which high-conviction stock picks are set to soar in the years ahead? (Value investors, who seek undervalued stocks and a margin of safety, might be asking a different question, perhaps wondering which growing companies have stocks that are being underappreciated in the market?)

Here's a look at a few very promising high-conviction stocks. See if any pique your interest for your long-term portfolio.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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What's "high conviction"?

First, let's define terms. A high-conviction stock is one that investors believe is likely to outperform in a particular period, delivering above-average returns. We might consider average to be about 10%, as the S&P 500 has averaged annual returns close to 10% over many decades.

I'm going to offer a brief review of several stocks highly regarded by my colleagues at The Motley Fool, but keep in mind that though they may be high-conviction stocks, they're not guaranteed to soar. Some great growth stocks flame out. And others may indeed soar, but at their own pace and not yours.

So, as with most stock investing, it's smart to spread your dollars across multiple companies, and to plan to give them time to perform -- which includes time to recover, should the market swoon. Our Foolish investing philosophy suggests buying about 25 or more companies and aiming to hang on to your shares for at least five years. (You might, instead, simply plunk much of your money in one or more excellent index funds, of course.)

1. Amazon.com

Let's start with Amazon.com (NASDAQ: AMZN). Plenty of people will agree that its future is very promising, and on top of that, its stock seems attractively priced, too! Its recent forward-looking price-to-earnings (P/E) ratio of about 34 is well below the five-year average of 47.

In case you don't appreciate Amazon's potential, understand that it's much more than one of the biggest online marketplaces on earth. It's also a major player in the cloud computing arena, with its Amazon Web Services platform. Meanwhile, one aspect of the company that's underappreciated is how significantly it's incorporating artificial intelligence (AI) into its operations, such as by using robots in its warehouses. This can significantly reduce its costs, boosting profitability.

If you're fearing a recession, you might worry about Amazon's retail business being hurt (as it could be by tariffs). But with Amazon often seen as a relatively low-cost seller, it might be hurt less than other retailers. And it has a lot more going on than e-commerce.

2. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) might not seem like a typical growth stock, but it's outperformed the overall market for decades, and it certainly has the potential to soar in the years ahead. The shares are down about 7% during the past three months (as of Aug. 13), in part due to anticipation over Chief Executive Officer Warren Buffett stepping down at the end of the year. But Buffett has built Berkshire to last, and he has long planned for his succession, with Greg Abel ready to take over.

Buy Berkshire Hathaway and you will become a part-owner of gobs of businesses entirely owned by Berkshire, such as GEICO, Benjamin Moore, See's Candies, and the entire BNSF railroad -- and you will have a stake in Berkshire's stock portfolio, too, which features major positions in companies such as Apple, American Express, Coca-Cola, and Bank of America. (Berkshire recently owned 9% of Coca-Cola, for example, and 2% of Apple.)

Berkshire stock is reasonably valued, too, at recent levels, with a recent forward P/E of 22.5, roughly on par with its five-year average of 21, and its price-to-sales ratio of 2.6, a bit above the five-year average of 2.2. It's a promising stock to own if you're worried about an economic downturn because with more than $300 billion in cash, the company can capitalize on opportunities that arise, as Buffett has frequently done.

3. Shopify

Shopify (NASDAQ: SHOP) is home to a platform that helps e-commerce businesses get up and running. It's also been a boffo stock, averaging annual gains of 45% during the past decade and 41% year to date (as of Aug. 13).

There's a lot to like about Shopify, including the fact that its business model is light and doesn't require lots of raw materials that might be affected by tariffs or global disruptions. The stock recently surged 22% in a single morning after posting estimate-beating revenue for its second quarter. Much of its revenue is recurring, too, which should appeal to investors.

Investors responded well to the company's increasing stickiness for customers as it adds features to its ecosystem and makes it harder for customers to leave. Shopify's forward P/E, recently 101, is a bit below its five-year average of 104, but both those numbers are on the steep side, reflecting high expectations for the company.

Consider any or all of these growing companies for your long-term portfolio -- and perhaps consider one or more fast-growing exchange-traded funds (ETFs), as well, if you're focused on growth and can handle some risk.

Should you invest $1,000 in Amazon right now?

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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Selena Maranjian has positions in Amazon, Apple, Berkshire Hathaway, and Shopify. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, and Shopify. The Motley Fool has a disclosure policy.