The fact that you landed on this page indicates you are already a pretty knowledgeable investor.
You have probably seen countless ads and articles from both the Motley Fool and Zacks Investment Research boasting their incredible returns.
And you are probably asking yourself, which stock picking service is better?
Today we will be comparing Zacks Premium and Motley Fool Stock Advisor.
These are two proven investment services and stock picking services with very different benefits and features.
Here is a quick peek at some of my analysis comparing various stock picking services. While they always boast about their long-term performance, I like to start by looking at their recent performance. Here is a quick snapshot of the performance of various newsletters’ 2023 picks and their last 12 months of picks:
As you can see, the Motley Fool Stock Advisor picks overall are very strong though Seeking Alpha, Zacks Home Run, and Zacks Stock Under $10 have some individual returns greater than 100% (see the MAX column). More on this chart later.
Okay – enough talking – let’s dive right into it!
Overview: Zacks vs. Stock Advisor
Len Zacks founded Zacks Investment Research in 1978. Zacks Premium focuses on providing independent research to give you insight into a company’s future expected performance and future performance. Ultimately, to give you a trading advantage. Nowadays, the company is run by industry experts who focus on quantitative analysis.
Specifically, they track:
- all of the brokerage and analysts ratings
- all earning per share forecasts (EPS), and
- earnings per share revisions.
Their research shows that stocks that are more consistently rating as “strong buys” AND that have their “EPS increased” year over year significantly outperform the market.
Here is their most compelling metric. The chart below (as of May 15, 2023) shows that the stocks they rate as a #1 Strong Buy have outperformed the market with an average annual return of 24.2% vs 10.7% over the last 35 years:
And just as important, stocks they rate as #5 Strong Sell significantly underperform the market. In fact, the slope of the chart is what you would hope to see as it slopes up quite smoothly from #5 (Strong Sell) to #1 (Strong Buy).
And FYI, Zacks analyzes equities, mutual funds, and ETFs.
The important thing to know about Zacks is this: They generally don’t tell you what to buy, but they show you their ratings on stocks that you might be thinking of buying yourself to aid you in your own research and decision making process.
Think of Zacks as more of a “do-it-yourself” research tool. It clearly works, but it is a DIY service.
About the Motley Fool
The Motley Fool Stock Advisor, on the other hand, is a stock RECOMMENDATION service. They don’t share their ratings on all of stocks and let you research your favorites like Zacks Investment Research does. Rather, they recommend 2 specific stocks to buy each month.
This stock picking newsletter was launched in 2002 by Tom and David Gardner, the founders of the Motley Fool, and they have had phenomenal results over the last 20+ years.
Take a look at this chart that shows you what you get and also note the chart on the right:
Their stock picks have consistently crushed the SP500 since the service was launched in 2022. Look at the chart again. Their picks consistently beat the market from 2002 to 2019 and then really spiked right before COVID and then returned to the trend line. But in the last few months their picks have resumed their strong upward trend–much more so than the S&P500.
The Motley Fool specifically recommends that you commit to holding at least 25 stocks, that you invest regularly, that you ride out the downtrends, and that you plan on holding the stocks at least 5 years.
I was so impressed with The Motley Fool’s reported performance that I subscribed in January, 2016 and have been so pleased with my portfolio’s growth and the consistency of their picks that I have been a subscriber ever since.
I actually buy about $1,500 of each of their 2 stock picks each month in my ETrade account. Here’s a quick peek at my ETrade account and their best pick of 2020 (as of July 14, 2023). I bought 60 shares of TESLA at (split adjusted) $28.59 on the day they recommended it January 2, 2020. On that $1,700 trade I now have a 884% return and a $15,000+ profit in 3.5 years!
And The Motley Fool’s stock picks that are at least 5 years old I am now beating the S&P by 99%. So my return is consistent with their charts and advertising.
And as I showed you earlier, the Motley Fool Stock Advisor’s last 6 months and their last 12 months are really beating the competition overall when you consider returns, winners percentage, Max % and Min %.
Stock Advisor is their oldest and premier Motley Fool newsletter service with over 750,000 subscribers. The primary purpose of this service is to TELL investors what two stocks to buy each month. They also tell you when to sell and over the 20 years they have sold off about 33% of their picks.
As you can probably tell, I am a BIG fan of the Motley Fool.
Zacks vs Fool Summary
We realize both Zacks Premium and Motley Fool Stock Advisor are similar (but different) in many ways. So how do Zacks’ top rated stocks perform vs the Motley Fool Stock Advisor picks? Let’s get started.
This comparison of these two services can help you decide which one to choose.
Here is the high level summary of the differences:
- Type of Service:
- Zacks: Stock Analysis tool to help you evaluate stocks and research your own stock ideas. Think of it as a do-it-yourself service for those of you that like to research your stocks
- Motley Fool: Stock Recommendation service that recommends 2 stocks each month and provides other “top stocks to buy” lists. This is an easier and less stressful way to build your portfolio because they tell you what to buy and what to sell each month.
- Years in Business:
- Zacks: Started in 1978
- Motley Fool: Launched first stock newsletter in 2002
- Most Compelling Statistic:
- Zacks: Their stocks rated a “Strong Buy” have an average annual return of 24.2% vs SP 10.7% going back to 1988.
- Motley Fool: Their Stock Advisor stock picks are up 462% vs the SP 125% going back to 2002.
- Current Marketing Promotion:
You really should try both of these services and take advantage of their 30 day money back guarantee! You have nothing to lose.
Before we get to the deep dive of actual returns of Zacks Investing Research ratings versus the SP500, let us give you a little background on what exactly Zacks is.
Zacks Premium gives you exclusive access to powerful research and tools and their Zacks rating of over 10,000 stocks. Access to these features will give you an edge in improving the performance of your investments. The Zacks Premium homepage gives you access to everything included in your membership. To get there:
- Log on to Zacks.com.
- Hover over the “Services” tab (top of the page)
- Select “Zacks Premium”
Pro tip: Bookmark this Zacks page to help you get their faster each day!
The Premium Tools & Resources include:
- Zacks #1 Rank List | The top 5% of stocks with the most potential, from Value to Growth, Moment and Income, and more!
- Industry Rank List | Sorts over 250 industry groups.
- Earnings ESP Filter | Stocks with the highest probability of surprising for profitable earnings.
- Premium Screens | Quickly access a list of the best stocks, including value, growth, momentum, income, and more!
- Focus List | A portfolio of 50 long-term stocks chosen by Zacks’ Director of Research, Sherax Miam based on earnings momentum.
- Research Reports | Covering more than 1,000 widely followed stocks, each report contains independent research from Zacks’ analysis and provides in-depth analysis on a company, its fundamentals and growth prospects.
So Does the Zack Ranking Really Work?
So, the question intelligent investors want to know is this: How reliable is the Zacks Rank at predicting future stock performance?
Here is the answer to that question:
Over the last 33 years, stocks that with a Zacks Rank of 1 have an average return of 24.2% versus the SP500’s 10.7%! And, as expected, stocks with a Zacks Rank of 5 have a poor average return of 2.2%.
Take a look at this chart below to see exactly how each rank has perform. As expected, stocks with a Zacks Rank of 5 are the worst, and the stocks with a Zacks Rank of 1 are the best. And it is a very smooth chart sloping upwards from 5 to 1.
From the chart below, you will see that for the last 35 years, stocks rated a 1-Strong Buy have an average annual return of 24.2% compared to the market’s 10.7%. And you see that the stocks rated 5-Strong Sell have a 2.2% return.
So the answer seems pretty convincing that the Zacks Rank is an excellent indicator of future performance.
Zacks also covers over 19,000 mutual funds, which are also rated from one to five. What do these ratings mean?
- A rating of ONE signals a “Strong Buy” recommendation.
- A rating of FIVE signals a “Strong Sell” recommendation.
For the U.S. stock funds, Zacks proprietary stock-rating system identifies the top holdings in each fund and uses that to determine the mutual fund ranking.
Additionally, you get links to articles featuring Zacks top stock, ETF, and mutual fund picks. And finally, the newsletter is e-mailed each weekday morning and summarizes the market, what the market means for investors, and what stocks are recently upgraded or downgraded.
Zacks Home Run Investor
If you want to give Zacks a try, the first service you should consider is their Home Run Investor which is only $149 for the first 12 months: CLICK HERE to get Zacks Home Run Investor.
If Zacks Premium is not enough…
…Zacks offers the following account options:
- Zacks Premium. This membership comes with everything we mentioned above.
- Zacks Investor Collection. This membership comes with everything in Premium, plus real-time buy and sell signals and the Stocks Under $10.
- Zacks Ultimate. This membership is the most inclusive package, including everything mentioned above and access to every recommendation the firm offers.
The Motley Fool Stock Advisor
The Motley Fool Stock Advisor is the company’s flagship newsletter service. Users get access to the company’s top investors and two new stock recommendations each month. Each recommendation comes with an in-depth, easy-to-understand analysis that tells you why you should consider each of their particular stock picks.
Here is what you get with Motley Fool Stock Advisor:
Ten Starter Stocks
The first recommendation for all new members is to consider the Stock Advisor’s “starter stocks.” If you are a new investor, these stocks can will help you build a well diversified portfolio of high growth stocks. They are typically re-recommendations of previous picks.
2 New Stock Picks Each Month
The Motley Fool is very “competitive,” and the Stock Advisor team is no exception. Stock Advisors are split into two teams, each let by one of the Founders of the Fool David and Tom Gardner, who work to each identify one stock worthy of members’ investment each month. The teams compete to provide the best stocks and track the performance of each pick.
Here is how those 2 stock picks have performed since 2002. You see they were really skyrocketing from 2019 to 2020, but then they took a slight hit in 2021/2022. But now they are back resuming their upward trend…
These returns are phenomenal. The Motley Fool investing philosophy says you should plan on holding at least 25 stocks, invest regularly, and plan on staying investing for at least 5 years.
Most importantly for you–is look how that curve is sloped up in the 2022-2023 range. Their picks are starting to skyrocket again.
Each pick includes a thorough write-up about the investment thesis behind each team’s choice, as well as potential risks. It is from these 2 new picks a month that the Motley Fool advertises these fantastic returns since inception in 2002.
5 Best Stocks to Buy Right Now
The teams also pick five “best buys now” each month (a total of ten picks). Each stock’s underlying businesses look to be much stronger than the current price warrants. For example, best buy stocks could include:
- Companies that have hit a minor setback
- Companies that have just reported great news
Best buys come with a short write-up detailing why the stock is a good investment at that time.
How have The Motley Fool’s 2 new stock picks performed over the years? They too have crushed the market!
Zacks vs Fool Summary and Conclusion
So how do you compare the Motley Fool’s 511% total return since 2002 to Zacks’ 24.2% average annual return?
Great question; and it is not easy because the Fool is picking 2 stocks a month so each pick has a different number of months of history. But look at this way:
- Their 2016 picks are up 402% which over 6 years is an average annual rate of return of 31% ((402%+1)^(1/5)-1)
- Their 2017 picks are up 259% which over 5 years is average annual rate of return of 29%
- Their 2018 picks are up 217% which is an average annual rate of return of 33%
- Their 2019 picks are up 85% which is an average annual rate of 23%
- Their 2020 picks are up 73% which is an average rate of 31%
So, without a doubt, over the last 6 years the Motley Fool picks are outperforming the Zacks 33 year average of 24.2%.
The Real Question About Motley Fool vs Zacks is This:
Do you want to do your own stock market research and double check your research with the Zacks Rating? If so, then try Zacks. Or do you want to get an email twice a month telling you which stock to buy? If so, try the Fool.
*** UPDATE -- Tuesday, October 3, 2023 -- MOTLEY FOOL STOCK ADVISOR AVERAGE RETURN OF ALL 500+ STOCK PICKS IS 511% VS THE S&P500'S 132% ****
The Fool investing philosophy is hold stocks for at least 5 years, invest regularly, and ride out the dips. Here is just a sample of some recent picks:
- TSLA picked again May, 2023 and it is up 75%
- CRWD picksed March, 2023 and it is up 21%
- NOW picked January, 2023 and it is up 58%
- TTD picked again Dec, 2022 and it is up 70%
- AMZN again Nov, 2022 and it is up 42%
Also, the Motley Fool just launched a special promotion: $120 off (see the link below).
Here is their release schedule of their upcoming stock picks:
- October 5, 2023 - List of 5 Best Stocks to Buy Now
- October 12, 2023 - New Stock Recommendation
- October 19, 2023 - List of 5 Best Stocks to Buy Now List
- October 26, 2023 - New Stock Recommendation
So, if you have a few hundred 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.
Updates on the Stock Advisor coverage universe
Stock Advisor is all about educating investors.
In addition to new stock picks, analysis, performance tracking, you also get quarterly updates on recommended stocks.
The company produces articles detailing what happened each quarter for Stock Advisor recommendations.
This analysis includes what went well, where each business is struggling, what management has to say, and anything else relevant to the investment.
Oh, and if there is news material enough to move the stock price 10% (up or down) in a single day…
…Stock Advisor will cover the news immediately.
What else can you ask for?
Research reports on major investing trends
The Stock Advisor team is always looking for the next significant investment.
This “thing” could be artificial intelligence, driverless cars, or any number of things.
As such, the team will produce special reports detailing the opportunities and the best stocks to invest in these trends.
The team also comes equipped with a scorecard that is used to track your own investments.
Lastly, there are message boards with a robust community of thousands of Stock Advisor members. These members come together to talk about their:
- Investing process;
- What they are buying and selling; and
- Anything they want!
Key Differences: Zacks vs. Motley Fool Stock Advisor
Zacks Premium gives users access to a variety of different stock analysis tools and ratings. Their stock lists are ranked based on many different metrics (i.e., earnings).
The information provided by Zacks is an excellent source to base your investment research on going forward.
Motley Fool Stock Advisor, on the other hand, offers specific beginning and monthly stock recommendations. If you are a newer investor, Stock Advisor is an excellent way to get your portfolio up-and-running. If you are an experienced investor, Stock Advisor stock picks are an excellent basis for your research. You can also gain insight into future trends and investments that you may have never considered.
So, what is the difference?
- Zacks provides much more quantitative analysis on stocks with the end-goal being to give you the tools you need to build your portfolio with solid stocks.
- Stock Advisor provides more fundamental analysis and specific stock recommendations with the end-goal being to tell you what to buy each month.
Each service differs to the point where both services can add value to your portfolio. However, there is enough overlap where you could get away with choosing one source of information.
Zacks Investing Research is an excellent stock picking service if you are somewhat familiar with investing and know what to with the data this company throws at you.
The Motley Fool Stock Advisor is better for casual investors that could use additional guidance with their investments.
Both services are very good and accomplish the overall mission, which is to…
…make YOU a better investor!
So, Zacks Premium or Motley Fool Stock Advisor – which will you choose?
*** Tuesday, October 3, 2023 ALERT—Motley Fool Picks Still CRUSHING the SP500!****
The Motley Fool Stock Advisor’s stocks picks, even with this recession, inflation, and COVID recovery have been performing very well as of late.
I have been a suscriber since 2016 and their average pick of the last 7 years is easily beating the SP500. Keep in mind these FIVE very important tips regarding the Motley Fool Stock Picks.
Tip #1 is that you need to buy them as soon as you get the alert because the stocks typically rise 2-5% in the first 24 hours of the pick being released.
Tip #2 is that I buy about $2,000 of each pick and I immediately place a 20% stop loss order to control risk.
Tip #3 is that their next stock pick should come out Thursday, so make sure you have subscribe now so you are ready.
Tip #4 is to always read your emails from the Fool because they also tell you when to sell stocks.
Tip #5 is to save $120 and get a Full Year of Stock Picks for only $79 (new members only)