If you have spent much time researching stocks on the internet, you have most likely come across advertisements for the Motley Fool and the Motley Fool Ultimate Buy.
These advertisements highlight different services and promotions from the Motley Fool…
…but they all revolve around recommending stocks with growth potential.
Some of the ads are labeled as “Motley Fool Ultimate Buy,” and prompt you to click to find out what is so “ultimate” about the stock they are recommending.
What you may not know is that the “Ultimate Buy” signal is a pretty big deal for the Motley Fool.
As an investor trying to get an edge, you rely on accurate research and hard data to compile a position before investing your money in one stock over another.
Does that sound like you?
If so, we are here to help.
So, what is the Motley Fool?
If you have stumbled across the “Ultimate Buy” alert, you may be wondering three things:
- What is the Motley Fool?
- What is an Ultimate Buy Alert?
- Why should I care?
All of these are valid questions, and each question deserves some attention so that you can accurately interpret the advertisement.
So, let’s start with the most important question, what is the Motley Fool?
The Motley Fool is an investment research, and financial media company that specializes in…
- Stock research;
- Stock recommendations; and
- Some personal finance and retirement planning as they have evolved over the years.
Since the internet is integral to everyday life, and there are dozens of investment newsletters and stock pickers to choose from, what sets the Motley Fool apart?
One of the many features unique to the Motley Fool is their longevity.
The Motley Fool was founded in 1994 by Tom and David Gardner.
The two brothers had each dabbled in stock recommendation newsletters prior to founding The Fool, but once they decided to work together, they found a model that stuck.
At the beginning of the service, they had a small office, and they were conducting all of the research themselves.
This was revolutionary at the time because Wall Street analysts were essentially the only investors with access to quality research tools and the know-how for interpreting the data and investing accordingly.
Although Main Street has access to more information and data than they could ever process today, this was not the case in the mid-1990s.
Tom and David saw the lack of quality investment data for the everyday investor, and they decided to attack the problem by starting the Motley Fool.
The Motley Fool’s name is a testament to their business approach.
They do not take themselves too seriously, but they constantly deliver value and in-depth research for their clients.
Today, the Motley Fool has offices all over the country.
Furthermore, the company has expanded internationally to countries such as England, Germany, and Australia.
You simply cannot stop these Fools!
Now that we have an understanding of The Motley Fool’s background…
…let’s dive into their services to learn why an “Ultimate Buy Alert” is so important.
Motley Fool Services
It is important to know that the Motley Fool offers three main services, including Stock Advisor, Rule Breakers, and Rule Your Retirement.
Motley Fool Stock Advisor is the flagship subscription service of the Motley Fool.
It is their longest-running service, and they add new subscriber features every year.
The service costs between $99-199 per year, and it consistently provides value for the beginning investor all the way to the veteran investor looking for the next big opportunity.
Two monthly stock picks are the core of the stock advisor service.
Really? Just two stock picks?
Tom and David each lead separate research teams, and their goal is to find the best stock to recommended every month.
Once they decide on what the stock of the month is, they each submit it to the newsletter.
Along with their picks, they include the research and justifications for choosing that particular company over all of the others.
As you dive into their research, you will see that they are unique in their approach because they can utilize both technical and fundamental analysis to help them in their decisions.
Fundamental research and analysis is the style favored by value investors like Warren Buffet because it focuses on all aspects of the underlying business to determine how the stock price may grow over time.
Some of the most common tools for fundamental research are quarterly and annual financials, competitive advantages, and growth potential.
The teams analyze how their companies handle their money and track how they increase revenue and control costs.
By understanding how the company’s financial health corresponds to its ability to increase value over time is imperative for investors because they are trying to invest for the long haul.
Competitive advantage is kind of like an “X-Factor” or “Secret Sauce” that will allow the company to stay ahead of any competition or imitators as they grow.
If a company has control over their financial situation, and they have a strong edge over their competition, then Tom or David are more likely to include them in their consideration for the monthly pick.
Technical analysis is typically equated with short or mid-term trading strategies because it emphasizes the activity of the stock price patterns instead of looking at the company as a whole.
If it is utilized properly, technical analysis can be quite effective in supplementing fundamental research because it can be useful in determining the market demand for the stock.
Although the two monthly stock picks are the core of the service, members receive other valuable perks such as a starter stock portfolio and other stock recommendations.
Many new investors are not comfortable building a portfolio, or they invest too heavily in one sector without diversifying.
The starter stock list is a curated portfolio recommendation that includes stocks from many sectors and market capitalization sizes.
It’s designed to take the pain out of creating a well-diversified portfolio from scratch as you begin your investing journey.
But the list is not exclusive to new investors.
Any portfolio can benefit from new stocks that decrease risk and increase the value proposition.
Stock Advisor subscribers also receive access to member-only forums where they can discuss their investment strategies, ask questions, and interact with other Motley Fool members.
Finally, Stock Advisor subscribers also get monthly stock recommendations from Tom and David’s teams that did not quite make it to the monthly stock pick, but are strong picks nonetheless.
If you are already a Stock Advisor subscriber, or you are looking to add some more diversification, the Motley Fool offers the Rule Breakers subscription service, which focuses primarily on growth and potential ‘home-run’ stocks.
By this point, you probably know that no one can perfectly predict what will happen with one stock versus another.
Sometimes sure wins turn out to be fraudulent duds, and some underdog stocks skyrocket because of an unexpected contract or technological breakthrough.
For example, all of the fundamentals for a manufacturing company are close to perfect, they are beginning to produce a new production line, and overall market sentiment is positive.
However, all of a sudden, their primary supplier goes out of business, or it comes out that they artificially inflated their revenue or did not fully report their operating expenses.
Now their shares probably tank, and no one could have predicted that.
On the other side of the coin, a small-cap software company may revolutionize a process and enter into a long-term contract with a huge company like Apple, which would most likely send their stock skyrocketing.
In a nutshell, this is the purpose of Rule Breakers.
It is finding the companies with an ‘X Factor’ that can result in an absolute knockout success.
Rule Breakers is led by Founder David Gardner, and his team separate from his Stock Advisor work.
The Rule Breaker Subscription is $99 per year, and it can be purchased with or without a Stock Advisor subscription.
- Two top Rule Breakers picks;
- Five additional potential investment opportunities;
- Access to the Starter Stocklist; and
- The member-only forum on the Motley Fool website.
The criteria for Rule Breaker stocks are distinctly different than those for Stock Advisor including:
Innovation and early adoption are essential for early-stage and growth-oriented companies to thrive and get ahead of their competition.
For example, pioneers in the social media and smartphone space were able to get ahead of late-comers because they were at the forefront of the new technology.
Long-term Competitive Advantage
Competitive advantage is what sets one company apart from the rest of its competitors. For Apple, a competitive advantage is its iOS system, or Google’s web ranking service sets it apart from every other search engine because Google is the company that decided to index the internet first.
High Stock Price Performance
Stock performance is very important for growth companies because they need strong momentum.
For David’s team to recommend a stock as a Rule Breaker, it needs to already experienced some level of success in the market.
A good company can fail if it has poor leadership.
The Rule Breakers team does a great deal of research into who is leading the companies as well as their financial performance.
Growth companies are especially reliant on strong and visionary leaders.
Strong Brand Awareness and Customer Appeal
Brand awareness does not equate to strong sales by itself, but it is vital for consumer companies to have a strong brand for them to grow quickly.
A Perception of Overvaluation
This may seem counterintuitive, but if many investors think a stock is overvalued, then it may present an excellent buying opportunity.
A Rule Breaker subscription can be a great resource for an investor who wants to add some higher risk diversity to a portfolio.
The name ‘Rule Breaker’ should indicate that the stocks recommended by this team are not in the traditional box of recommendations, but they are something potentially special.
Think about it this way, you don’t want your only investments to be in very risky stocks, but once you have a solid foundation in your portfolio, adding some extra risk can generate returns you wouldn’t find elsewhere.
Rule Your Retirement (RYR)
Rule Your Retirement is a newer service from the Motley Fool that is led by Robert Brokchamp, a Certified Financial Planner (CFP) who specializes in retirement planning and other aspects of personal finance.
RYR is a very different service from Stock Advisor and Rule Breakers because it focuses on retirement planning and education for everyone from recent college grads and professionals who have already retired.
This is a unique service for the Motley Fool because it does not focus entirely on stock recommendations.
Pensions and Social Security used to be sufficient for paying for your retirement, but that is no longer the case.
Today, you have to be aware of 401k’s, mutual funds, IRAs, and more.
Brokchamp and the team at RYR understand that everyone has a different career progression, but everyone still needs to prepare for retirement.
Thankfully, the $99 RYR subscription comes with great tools such as updated research on mutual funds, forums to discuss retirement news, and much more.
Retirement is an interesting discussion because you may feel like it’s too far away, or it is too late for you to do anything about it.
Rule Your Retirement wants to challenge traditional views of retirement saving strategy because there are so many factors that contribute to a successful retirement.
If you are at the beginning of your career, you may want to take advantage of Roth IRA’s because you will (hopefully) be in a lower tax bracket at the beginning of your career versus the end of it.
Roth IRA’s are after-tax retirement investment vehicles, which means you contribute to them after you’ve gotten your paycheck and paid your taxes.
What’s the big deal?
Since you already paid the taxes on your contribution, none of the capital gains over the next 30 or 40 years will be taxed since you already paid them.
That’s right, the money could grow infinitely, but you still won’t pay any more in taxes.
401k contributions are vital during your career as well.
A long time ago, pensions were funded by employers to cover the expenses of the employees during their retirement, but as time went on, pensions became more expensive and less practical.
Pensions were essentially savings accounts that employers contributed to as employees worked at a company. Once the employee had worked long enough, their pension would be vested, and they would be guaranteed a certain income for the rest of their life.
Does this sound too good to be true?
It didn’t used to be, but now most companies cannot afford pensions, so they switched to a 401k plan with matches.
401k plans require employees to contribute to their retirement savings by paying into investment accounts with money from their paychecks.
Employers have the option to match certain percentages (usually between 1-10% depending on the company).
RYR advocates for employees investing at least to their match at the risk of leaving ‘free money’ on the table.
For example, if your employer matches 6% of your contributions, that means up to 6% of your paycheck can be doubled if you contribute to your 401k, which can supercharge your retirement savings.
One of the most important factors to consider with a 401k is the tax structure. With an IRA, you pay the taxes upfront and enjoy tax-free gains.
401k plans are the opposite. You contribute to them pre-tax, and pay taxes when you withdraw the funds during retirement. Depending on where you are in your career, having both can be beneficial.
Motley Fool Ultimate Buy Alert
Now that we understand what the Motley Fool is, and how their services work, let’s break down what an Ultimate Buy Alert is, and why they are so important.
In Stock Advisor, Tom and David Gardner each work independently with their teams to recommend a stock for the monthly newsletter.
Since their research methodologies are different, and there are so many public companies out there, they usually choose different stocks.
However, every so often, they both end up choosing the SAME stock.
This is so rare that it has only happened 25 times in the history of the company – roughly one per year since the newsletter started.
When they both decide on the same stock, it usually performs exceptionally well.
For example, both Tesla and Netflix were ultimate buys if that is any indicator.
Again, no stocks are guaranteed, but when David and Tom land on the same stock, you know it will be exciting.
If you sign up with the Motley Fool, you will get access to these Ultimate Buy recommendations and many more alerts for some of the best investment opportunities on the market.
You will NOT want to miss out on these alerts.
It is time to take ACTION!
Tom and David have spent decades developing the Motley Fool and curating stocks for their subscribers.
The brothers have spent many years building their reputation and have excellent investment advice for all levels of investors.
If you’re curious about any of their services, check them out.
Even more importantly, you will get access to the Moltey Fool Ultimate Buy Alerts!
Alternatively, you can ignore our advice and miss out on these opportunities…
…it is YOUR financial funeral.
*** UPDATE -- Wednesday, October 5, 2022 -- MOTLEY FOOL STOCK ADVISOR AVERAGE RETURN OF THEIR LAST 120 STOCK PICKS IS +207% ****
Also, the Motley Fool just launched a special promotion with their biggest discount ever: 60% off (see the link below).
The year 2021 was tough in so many obvious ways, but if you were a Motley Fool subscriber you are smiling given that the average return of their last 120 picks that have at least 12 months history is +207% thru December 31, 2021. That is +115% better than the SP500!
Better yet, we have been tracking ALL of the Motley Fool stock picks since January 2016. That's over 6 years and over 144 stock picks. As of Friday, December 31, 2021, their 2020 picks are up 73%, their 2019 picks are up 85%; their 2018 picks are up 217%, their 2017 picks are up 259%; and their 2016 picks are up 402% for an average return of 207% over the last 5 years. 78% of their picks were profitable and 53 have more than doubled! The Fool has done so well because they quickly identify stocks year that will perform well in the current environment. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.
- Tesla (TSLA) picked January 2, 2020 and it is up 1,128%
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Here is their release schedule of their upcoming stock picks:
- October 6, 2022 - David's New Stock Recommendation
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- October 27, 2022 - David's List of 5 Best Stocks to Buy Now List
So if you have a few hundreds dollars to invest each month and plan on staying invested for at least 5 years, we haven't found any better source of stock picks. When you subscribe, you also get full access to all of their recent picks.