Investing in high-growth stocks can be incredibly rewarding. However, growth investing requires that you check your emotions at the door. That's because truly disruptive growth stocks are often hidden in plain sight behind pricey valuations, sky-high P/E ratios, and largely unproven business models. But if you can look beyond these things and instead focus on companies with sustainable competitive advantages over industry peers, you're sure to uncover some long-term winners.
Consider this: Investors who bought shares of Apple 10 years ago have since seen its value grow by an astounding 8,032% in that time. Finding the next Apple stock isn't as challenging as you might imagine. It means looking to the future and investing in great companies, not just the numbers on their latest earnings reports.
To help you get started, here are four companies that I suspect will achieve outsize gains over the next 10 years.
Ahead of the curve
First up is e-commerce giant Amazon.com (AMZN 3.43%). The e-tailer is surging ahead of competitors, thanks in large part to the visionary leadership of its founder and CEO, Jeff Bezos. Amazon's price advantage and low-overhead cost structure have left bricks-and-mortar retailers including Best Buy fighting for their lives.
On a separate note, Amazon continues to invest heavily in its future. I see this as one of many positive catalysts for the company, despite worries by some analysts that Amazon is burning through cash too quickly. Shares are down nearly 8% this month, which I think makes the stock even more attractive for long-term growth investors.
On the surface, the stock looks pricey, with a forward P/E multiple north of 100. But remember, intimidating valuations are a common trait of promising growth stocks. And I have no doubt that Amazon's strategy of sacrificing current profits for future profitability will pay off in spades.
Printing money
Next up is a company that's winning through disruptive technology. Enter 3D Systems (DDD). The 3-D printing stock is up more than 151% year to date, but that doesn't mean there isn't more room to run. With a diversified product lineup that ranges from high-end 3-D production printers to more affordable options, 3D Systems is well positioned to capitalize on future widespread adoption of 3-D printing.
There's little coincidence that at the same time that companies such as Hewlett-Packard (HPQ -0.46%) struggle to make ends meet, businesses like 3D Systems hit the scene with truly game-changing technology. As my Foolish colleague Alex Planes points out, less than 25 years ago HP made a name for itself by delivering affordable printing technology to the masses.
Today, 3D Systems is just getting started. In the past year, the company's sales have grown at an average annual rate of more than 47%. Custom 3-D printing has found its place within a variety of industries, helping manufacture everything from dental implants and crowns to hearing aids. And, as the industry leader, 3D Systems stands to benefit greatly from its presence across such pertinent markets.
At the moment, recurring income makes up about 70% of the company's total revenue. Moreover, advances in the technology and a growing demand for additive manufacturing should significantly boost profits for 3D Systems in the years to come. To be clear: It will take time for this technology to hit mainstream, given the technical nature of 3-D. However, patient investors should be rewarded handsomely.
As bright as 3D Systems' future looks, it's not without risks. The company is growing through acquisitions, which can be a risky plan if it takes on significant debt to do so. That said, 3D Systems' debt is more than manageable at this point. Nevertheless, if you're not yet ready to hit the Print button on this forward-thinking company, perhaps you'll be more inclined toward my next high-growth stock pick.
A clean start
This next company addresses one of the major problems we face today: energy security. Clean Energy Fuels (CLNE 8.00%) is powering our way to a sustainable energy future by providing natural gas for trucking fleets in the U.S. and Canada. The company serves big businesses such as Waste Management and Republic Services.
More important, Clean Energy Fuels is currently focused on completing "America's Natural Gas Highway." If accomplished, the network of natural-gas fueling stations along busy trucking routes would spark even greater demand for nat-gas-powered engines. Of course, this would lead to considerably more business for Clean Energy Fuels.
Here's where the risk comes into play: Clean Energy Fuels has yet to post a profit. But before you write it off as a viable investment, consider this: Building a natural-gas infrastructure from the ground up isn't cheap and it won't happen overnight. That combination makes this stock a speculative play. However, risk-tolerant investors like myself see it another way.
Clean Energy Fuels is investing in an alternative-fueling plan that has the potential to transform the trucking industry. Game-changing strategies like this are meant to be risky. And that's OK, because with greater risk comes added reward. I'm not one to get discouraged, and I see natural gas as the future -- and Clean Energy Fuels as the vehicle to get us there.
Let 'em run
The stocks I've highlighted here have more in common than their above-average growth potential. These picks are long-term plays that don't need babysitting. To be clear, I'm not suggesting that you buy shares and ignore them for the next five to 10 years. Rather, give them time to appreciate in value while checking in periodically to make sure the investment thesis hasn't changed.
It pays to be a patient investor. And these companies stand out as solid growth stocks to own for the next decade.
