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 the Motley Fool and from Zacks Investment Research.
And you are probably asking yourself, which one is better?
Today we will be comparing Zacks Premium and Motley Fool Stock Advisor.
These are two proven investment services with very different benefits and features.
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 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 rating and earning per share forecasts AND 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.
Zacks analyzes equities, mutual funds, and ETFs. So, they don’t necessarily tell you what to buy, but they show you their ratings on stocks that you might be thinking of buying yourself.
About the Motley Fool
The Motley Fool Stock Advisor, on the other hand, is a premium stock RECOMMENDATIONS service launched in 2002. Tom and David Gardner lead Stock Advisor, the oldest and premier Motley Fool newsletter service. The primary purpose of this service is to TELL investors what two stocks to buy each month.
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.
Zacks vs Fool Summary
Here is the high level summary of the differences:
- Type of Service
- Zacks: Stock Analysis Tool to help evaluate stocks
- Motley Fool: Stock Recommendation service that tells you what to buy 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 25.1% vs SP 11.2% going back to 1988.
- Motley Fool: Their Stock Advisor stock picks are up 400% vs the SP 128% going back to 2002.
- Current Marketing Promotion
Alternatively, you may find that these services complement each other and sign-up for both.
Before we get to the actual returns of Zacks 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 25.1% versus the SP500’s 11.2%! And, as expected, stocks with a Zacks Rank of 5 have a poor average return of 3.2%.
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 34 years, stocks rated a 1-Strong Buy have an average annual return of 25.1% compared to the market’s 11.2%. And you see that the stocks rated 5-Strong Sell have a 2.8% 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 5 Stocks Set to Double List for FREE
If you want to give Zacks a try, the first service you should register for is absolutely free: CLICK HERE to get Zacks 5 STOCKS SET TO DOUBLE. That list is updated each month and is free.
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 from each of the last 5 years have performed through date date at the top of the table (I am ignoring 2021 stocks as they all don’t have 12 month of performance yet):
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 Fools 2 new stock picks performed over the years? They too have crushed the market!:
Zacks vs Fool Summary
So how do you compare the Motley Fool’s 501% total returns since 2002 to Zacks’ 25.6% 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 451% which over 5 years is an average annual rate of return of 90% (451^(1/5))
- Their 2017 picks are up 354% which over 4 years is average annual rate of return of 63%
- Their 2018 picks are up 248% which is an average annual rate of return of 82%
- Their 2019 picks are up 108% which is an average annual rate of 53%
- Their 2020 picks are up 106% which is an average rate of 106%
So, without a doubt, over the last 5 years the Motley Fool picks are outperforming the Zacks 33 year average of 25.6%
*** 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%
- HubSpot (HUBS) pickeed November, 2019 and it is up 423%
- Zscaler (ZS) originally picked November, 2018 and it is up 724%
- Nvidia (NVDA) January, 2017 and it is up 1,046%
- Shopify (SHOP) picked March, 2016 and it is up 4,162%
Don’t miss out on their 55% off price promotion: New Members Claim 55% Discount*
Here is their release schedule of their upcoming stock picks:
- October 6, 2022 - David's New Stock Recommendation
- October 13, 2022 - Tom's List of 5 Best Stocks to Buy Now
- October 20, 2022 - Tom's New Stock Recommendation
- 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.
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. Stock Advisor
Zacks Premium gives users access to a variety of different stock picks.
These stock picks are ranked based on many different metrics (i.e., earnings).
Additionally, Zacks provides rankings of numerous funds to give investors an idea of whether to buy or sell.
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 beginning and monthly stock picks.
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 funds with the end-goal being profitable investments.
- Stock Advisor provides more fundamental analysis on stock recommendations with the end-goal being profitable investments and
Each service differs to the point where both services can add value to your investments.
However, there is enough overlap where you could get away with choosing one source of information.
Zacks is excellent if you are somewhat familiar with investing and know what to with the data this company throws at you.
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?
WALL STREET SURVIVOR'S BEST OF THE BEST LIST
*** Wednesday, October 5, 2022 ALERT—Motley Fool Picks Still CRUSHING the SP500!****
The Motley Fool Stock Advisor’s stocks picks, even with this COVID crisis, have been performing very well as of late.
Overall, their 24 stocks picks from 2020 are up 106% compared to the SP500 return of 50%. 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. Two of their picks got stopped out in the last 12 months.
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 do tell you when to sell stocks.
Tip #5 is to get A Full Year of Stock Picks for only $89 (new members only)