As a trader, your level of experience doesn’t always matter. You can always swim with the sharks provided you can get the right kind of expert help available. Indeed, this is where stock picking services come in – and they are all over the place these days.
From where we sit, Motley Fool and Action Alerts Plus are two of the biggest names out there currently. From a distance, they may seem alike, but in reality, there are major differences between them.
In this article, we shall break down the key features of both programs to help you decide which one is best for you. Have a read.
Overall Rating: 4.6/5
Action Alert Plus
Overall Rating: 4.3/5
About Motley Fool
The Stock Advisor program by Motley Fool is a subscription service offering research-based stocks tips every month. Every month, you will get two new stock picks in addition to full access to all the stock picks the company has made over its existence.
Further, using the service is relatively easy since it points out the best stocks to buy, and you can buy them in your brokerage account.
About Action Alert Plus
On the other hand, Action Alerts Plus by Jim Cramer is a service that allows you to follow Cramer’s investments by giving you full access to the investment portfolio behind his charitable fund. It follows a conservative investment strategy and mainly targets investors saving up for retirement.
Even with that, you will still notice that most of its stock picks are a combination of fundamental and technical analyses.
Similarities Between the Two Services
In comparing the two programs, we shall start by looking at the areas where there are some similarities. They include:
1. The Stock Picks
The main similarity between the two programs is that they provide their members with exclusive stock picks. Whereas Action Alerts Plus lets you see the stocks that Cramer is purchasing for his portfolio, Motley Fool will provide you with a list of starter stocks, two monthly stock picks and ten timely purchases.
Each of the Stock Advisor’s picks is accompanied by detailed reports explaining why the experts believe that the stock is headed for massive growth. As for Action Alerts Plus, a recommendation comes with a paragraph analyzing the technical or fundamental factors prompting a particular trade.
Note that there are investors who prefer detailed alerts, while there are those who like keeping things simple.
Another similarity between the two programs arises from the fact that you will get access to a community of members, and this will allow you to interact with like-minded investors.
Here, you will find experienced traders offering advice to the newbies, plus you will share different ideas with each other.
3. Educational Resources
The websites have educational content that you can access for free. But once you subscribe to the paid plans, you will get more detailed insights into significant events and current market trends.
All these are meant to help you become a better trader and reap maximum returns from your investments.
4. Customer Support
We also noted a similarity in Motley Fool’s and TheStreet’s customer service whereby both have customer service numbers which you can use to contact the company representatives. Note that the calls are only to be made during business hours.
Additionally, both have email addresses through which you can contact the company at any time.
Next, we shall look at the areas where the two services stand apart from each other. Here is a breakdown of the differences:
1. Investing Style
The Stock Advisor’s recommendations are based on fundamental analysis, and it focuses on stocks headed for massive growth or the undervalued ones. Each stock pick cover comes with detailed reports discussing current trends, new product lines or any other factor that the experts consider to be relevant to the company.
Then, the stock picks are issued twice a month and come without entry and exit points. Since the Stock Advisor’s picks are meant to be held for several years, they are ideal for long-term investors.
On the other hand, the picks by Action Alerts Plus are based on a combination of technical and fundamental factors, although they tend to lean more towards the latter.
We also noted that Action Alerts Plus tends to rely on scaling into and out of positions whereby the recommended trades pay more attention to increasing or decreasing the position in stock already in the portfolio instead of buying something entirely new.
2. Historical Performance
In comparison, we shall determine which of the two services has offered better picks over the years. Since 2002, the Stock Advisor’s picks have recorded returns exceeding 500% at an average of over 16.6% annually.
On the other hand, between 2001 and 2017, Action Alerts Plus noted returns of 97.5%. When you compare this with the over 200% for the S&P 500 over the same period, you will agree that the Motley Fool service is a better performer.
You should also keep in mind that past performance does not always say how the future returns will be but only represents how they are capable of doing.
3. The Format of the Stock Picks
Both platforms are also distinct in the way they present their stock picks. Let’s start with the Stock Advisor, whereby it issues two picks per month and sends them to the subscribers in an email. This mail will contain an analysis of the picks accompanied by in-depth reports explaining the logic behind each recommendation.
So, you will not have to do much to keep up with the Stock Advisor portfolio.
In contrast, Action Alerts Plus issues daily buy and sell alerts and assign each stock in the portfolio a rating scale of one to four. So, you will get the chance to conduct your independent research away from Cramer’s portfolio, plus leaves room for further interpretation.
4. The Pricing
The service by Motley Fool is relatively cheaper, and has an annual cost of $199. At times, you may come across discount deals that bring the price to as low as $99 for the first year. This is in comparison to Action Alerts pricing, which costs $29.99 per month or $299.95 per year.
Besides the similarities and differences between the two services, there are certain features that are exclusive to each of them. Let’s find out what they are:
The Motley Fool Stock Advisor
Since this service has been around for about twenty years, it has offered more stock picks over time. Further, once you sign up, you will get full access to the library with all its past recommendations.
Then, this platform also contains a list of starter stocks that the developers believe would be wise for all investors to have in their portfolio, regardless of their level of experience. Having these stocks would be a clever way of staying ahead of the pack in the trade.
Action Alerts Plus
One unique feature of Jim Cramer’s service is that you will be eligible for monthly conference calls with him once you subscribe to it.
Another aspect of this program is that instead of only getting advice on the stocks you should have in your portfolio, you will get actual access to Jim’s portfolio. As a result, you will be receiving alerts whenever he trades a particular stock, and this shows that he doesn’t give tips blindly but the stocks he also trades in.
Who Are These Services Best For?
Although both are stock picking services meant to give you an easy time trading stock, different types of investors will benefit from them in different ways. For instance, if you are into universal stock tips, the Stock Advisor would be perfect for you.
Then, Action Alerts Plus is also an ideal choice as you will get access to Jim Cramer’s portfolio and see the moves that he is making. This will show you that he has faith in the tips that he is giving the subscribers to his service.
Which One Is Better?
It is easy to see why you would consider the Stock Advisor to be more worth going for from our analysis. First, it is miles ahead of the Action Alerts Plus in terms of returns, even though their time in the business is not that far apart.
Then, it is significantly cheaper, plus you will not have to spend much time looking at what is happening in the market.
We can all agree that both services would go a long way in helping you pick the right stocks to trade in.
However, the Stock Advisor is superior to its competitor in different aspects. For instance, its pricing is hard to beat while it does not need much work to keep up with the portfolio. Most importantly, its track record is more impressive.
Action Alerts Plus is not that bad off, only that it would suit you if you need broader market research on top of the recommendations that the service offers.
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