When it comes to investing, everyone is trying to get an edge, whether they admit it or not.
The stock market is both the greatest wealth-generating tool in the world, and it is a potential black hole where you can lose an obscene amount of money in an instant.
In order to get ahead, many investors rely on stock picking services to help them achieve an edge and through the thousands of stocks that are listed on the exchanges.
Would you like to get ahead?
Well, you have come to the right place!
Stock picking services take much of the leg work out of investing by compiling and analyzing large sets of stock data and recommending the best stocks to buy based on a defined set of criteria.
This includes quarterly earnings, leadership, market share, and more, which all contribute to the research conducted by stock picking companies.
One of the benefits of using a stock picking service is that there are often services that cater to certain markets such as penny stocks or growth stocks.
At its core, the stock market is very simple.
It is an open marketplace where publicly traded companies offer pieces of their business to potential investors and speculators.
When companies list their shares on an exchange, they are attempting to raise funds from the public with which they will spend to grow their business and hopefully increase their share price and deliver value for their investors.
Investors come in all shapes, sizes, and forms.
An investor can be an 18-year-old who opens a brokerage trading account for the first time, or an investor can be a hedge fund with billions of dollars at its disposal and everything in between.
Now, what separates the hedge fund from the teenager (besides the amount of capital at its disposal)?
Their investment strategy, of course.
Our investment strategy dictates how we invest the money that we have at our disposal.
Over the decades, two over-arching investing strategies have shaped the perspective of most investors – passive and active investing.
So, let’s take a look at how both passive and active investors can gain a lot from stock picking services.
Passive Investors
Passive investors are not oblivious to their investments.
Rather they believe that the market will generate the most stable returns over the long run because there are so many variables that affect the outcome of a company’s financial performance.
The biggest factor dictating how a stock will perform may have nothing to do with the company itself.
For example, if a manufacturing company relies on a single supplier for their raw materials, and that supplier goes under or cannot deliver, then the manufacturer will suffer.
The manufacturer has no control over the supplier, but the supplier still has tremendous influence over its success.
Passive investors will invest in an index or a mutual fund to mitigate risks like this by spreading their investment over many shares of many companies.
An index like the S&P 500 is a gold standard for passive investment because it represents the 500 largest companies in the American economy.
In short, passive investors are betting on the long-term stability of the market — these investors do not jump in and out of their investments.
Active Investors
Active investment occurs when an investor or portfolio manager makes an intentional decision about what stocks they are going to buy or sell versus alternative options.
Active investors practice this investment style because they believe that they have a better chance of achieving superior returns instead of what the market will generate.
The term “beating the market” is attributed to active investors because they believe that over the long-term, they will earn a higher rate of return than if they just left it in the market.
Active investors need to conduct in-depth research about the companies they choose to invest in because their portfolios are typically focused on a small group of stocks.
On the other hand, passive investors are more likely to invest in pieces of hundreds or thousands of stocks.
Regardless of your investment style, you will want to ensure that you are wisely investing your money.
Therefore, whether you are active or passive, you could use the help of a stock picking company.
The Best Stock Picking Companies
Now that we have reviewed the two major investing strategies let’s dive into the best stock picking services available.
Morningstar
Morningstar is one of the most well-known investment research companies out there.
The company also delivers an immense amount of value with their stock pick recommendations in their premium service.
Founded in 1984, Morningstar’s purpose has been to provide the best investment research on Wall Street and make it accessible to the average retail investor.
The membership for Morningstar Premium starts at $199 per year and offers a plethora of stock picking resources for subscribers.
Morningstar offers stock screening, which helps sort through potential investment ideas.
However, Morningstar research shines with the way that they offer their picks by assigning a value of gold, silver, or bronze to their top stocks.
The top picks dashboard is optimized to show the company names, historical returns, and what they are currently rating the stock.
Gold stocks are the best of the best according to their criteria.
Gold stocks have excellent fundamentals, and they usually have some form of ‘X’ Factor that sets them apart.
Silver stocks have great fundamentals and are on a positive trajectory.
Finally, Bronze stocks have strong fundamentals but are waiting for their next breakout moment.
Other features in the Morningstar Premium service include ETF picks, analysis for mutual funds, and recommendations for high-yield stocks that seek to deliver strong quarterly dividends.
For $199, Morningstar has plenty of tools to offer traders, and an excellent reputation behind it.
Motley Fool Stock Advisor
If you have ever looked into a stock picking service, then you have undoubtedly come across the Motley Fool over the course of your research.
In fact, most of their advertisements center around the theme of picking the next big stock, and they have an immense team of analysts in offices all over the world.
Since they are so big, you may be curious about how they operate and how you can benefit from their service.
The Motley Fool was founded in the mid-1990s by brothers Tom and David Gardner, and their mission was to offer the best stock analysis service that was accessible to the average investor.
We believe they have accomplished this goal.
Their flagship service is the Motley Fool Stock Advisor subscription, which costs between $99-$199 annually, depending on promotions.
So, what makes Stock Advisor so special?
Not only does Stock Advisor provide actionable stock picks, but a subscription includes a comprehensive introduction to investing in the stock market as a whole.
Every month, Tom and David work with their teams to identify what they consider to be the next big stock.
Their analysis uses different approaches like fundamental analysis, technical analysis, and more.
At the end of their research, they each submit their stock to the next monthly newsletter (two picks per month), along with all of the supporting research behind it.
So, you just get two stock picks per month?
Not even close.
Along with their top stock picks, you get…
- A list of other top performing stocks with supporting research that provides some great trade ideas;
- You get access to members’ only forums to discuss your findings with other investors; and
- They also give you their starter stock list.
Whether you are a brand new investor or a seasoned trader, the starter stock list is a huge asset.
The list is made of a diverse group of stocks in many different industries.
This list is very helpful because it creates a sample portfolio that is intentionally diversified.
Why does this matter?
Many investors have difficulty building diversification into their portfolios due to unconscious bias or because they invest too heavily in the same group of stocks.
If you own 10 different bank stocks, you may think you have a diverse portfolio, but in reality, if the entire financial services industry drops, your entire portfolio will drop with it.
Thankfully, the starter stock list helps investors pick the right stocks and keep their portfolio diverse.
Motley Fool Rule Breakers
Rule Breakers is the aggressive growth stock picking service from the Motley Fool.
Priced at $99 per year, there is a lot of potential value in its recommendations.
However, it is important to understand the distinct differences between the two subscriptions.
The Rule Breakers service is spearheaded by founder David Gardner, and they focus on analyzing companies that are poised to have a monumental breakout in the near to medium future.
Before you choose Rule Breakers, make sure you understand your investment goals.
Growth stocks get their name by focusing on products and services that can launch into an exponential increase in value and share price.
Famous growth stocks you may know are Netflix and Tesla, for example.
Rule Breakers has a long track record of performing well and choosing great companies.
However, a new investor should understand that the picks recommended by Rule Breakers are going to be more volatile than the picks recommended by Stock Advisor.
Volatility can be a great thing because it shows that there is a significant amount of speculation in a particular stock.
But, you should avoid losing your cool if some of the prices regularly fluctuate 10% or more.
For the investor with a firm understanding of portfolio management, or wants more exposure to growth stocks, Rule Breakers can be a GREAT addition to your stock picking research.
Zacks
Zacks is another renowned investment research service company packed with features for its subscribers.
At the core of their stock-picking services is their graded rating system that assigns a rank with 1 being the absolute best.
One of the methods to rank a stock is its Expected Surprise Prediction (ESP). The ESP rating is a weighted prediction of how much a stock will beat its consensus quarterly earnings prediction. The higher the ESP, the higher Zacks anticipates the stock’s performance to be.
Investors who like fundamental analysis in their stock-picking strategies may enjoy the Zacks approach, and they have access to the tools at three different membership levels.
Basic
The Basic membership from Zacks is very informative and primarily offers news and observation tools.
Subscribers receive a daily email with a handful of #1 rated stocks, a stock of the day, and access to rankings for mutual funds.
For investors who want a quick reference, the basic membership is more than enough, but if you want to take advantage of some of Zacks’ more powerful tools, you will need to upgrade the premium membership.
Premium
The Premium membership from Zacks is $249 per year and offers a host of interactive portfolio tools, along with additional research sources.
One of the most useful portfolio tools is the ability to link your portfolio to the Zacks platform and compare your holdings to their Zacks ratings.
This, in and of itself, can be an excellent gauge to understand how they perform their research and help you understand your trades better.
For stock picking, premium members receive access to all of Zacks research reports and rankings, so you can find all of their top-rated stocks and screen them to see if they fit your portfolio.
Ultimate
Zacks offers ann Ultimate membership for $2,995 per year, which is targeted towards high net worth individuals and professional traders.
What makes this membership so powerful?
Not only do members receive all research and exclusive recommendations, but they also receive access to all of the Zacks strategy training.
The main benefit of this is the combination of both getting the best stock picks, but also how to buy and sell, how much to allocate for each, and much more.
As you can see, Zacks has great resources for every level of investor, so if you are interested in their style, start with the free account and work up from there.
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Warrior Trading
Warrior Trading is one of the most popular day trading educational courses and communities out there.
Many stock picking services focus on buy and hold strategies, but when it comes to day trading, it can be difficult to find a reputable group with a comprehensive platform.
The founder, Ross Cameron, enables his students to go from no trading experience to confident day traders through his tiered courses.
Free
In the free Warrior intro course, prospective students learn 3 key lessons from the Warrior model and receive a free guide to get them started on their day trading journey.
The lessons include how to reduce risk and increase chances of success, how to pick the right stocks to trade, and what to avoid, and finally, how to build a strategy based on the Warrior Method.
The main goal of the free course is to help students determine whether they would be interested in joining the full program at the Starter or Pro level.
Starter
If students enjoy what they learn in the free intro course, then they can join the starter program for $997 the first month, and $197 per month for the rest of the year.
Since this is a pretty decent investment, the courses go into great detail about how to think about day trading and how to implement effective trading strategies.
Students also receive access to the chat room and trading simulator, which are very powerful tools for the novice day trader.
The chat room gives direct communication to the Warrior team, who is available to answer questions during trading sessions.
Pro
Finally, Warrior offers a Pro membership that costs $5,299 per year and includes everything from the Starter membership as well as advanced classes and group mentor sessions.
The Mentor Sessions are invaluable because they offer in-depth coaching from the Warrior team.
Tim’s List
Tim Sykes is a well-known figure in the investment world due to his success trading penny stocks with money he saved from his Bar Mitzvah.
He created Tim’s List, which is an excellent stock-picking resource for traders who focus on penny stocks.
Since there is so much misinformation about how to trade penny stocks, Tim has curated an impressive educational system to effectively teach investors about penny stocks and how to trade them.
His first subscription tier is $697 per year and includes daily emails, stock alerts, and chatroom access to talk with Tim’s list community.
For advanced penny stock traders who are looking to beef up their trading knowledge, Tim offers the Pennystocking Silver membership for $1,297 per year, which gives members access to over 6,000 videos and more.
If you are looking for the best introduction to trading penny stocks and getting solid stock recommendations, Tim’s list is a reputable and accessible resource.
Take it Away!
Now, as you can see, stock picking is much more than rolling the dice and hoping for the best stocks to fall into your portfolio.
There is an art and a science to investing strategy.
The more research you perform, the more likely you are to align yourself with a stock-picking group that matches your investment style.
So, take some time to decide what you are looking for by asking yourself…
- What types of stocks you want to trade; and
- What level of analysis you need.
And if you’ve heard it once, you’ve heard it a thousand times…
…make sure you perform due diligence on any stocks that are recommended to you.
Don’t take the word of Uncle Jimbo or the day trading guru who lives in a studio apartment.
What is your favorite stock picking service?
Get the conversation going with a comment below!
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