Gone are the days when you had to leave your house every day so that you could make some extra money. In this digital era, there are smart ways of earning an extra coin.
A good example is investing in the stock market where you could sit by and let your money work for you. However, trading in stocks is not a walk in the park, and if you get a single step wrong, you could end up with huge losses.
So, we insist that you try out stock advisory services that would guide you as you embark on swimming with the sharks.
Now, there are many stock advisory services on the internet, some of which are merely scams.
As per our research, the two leading stock-picking services are Motley Fool and Zacks Premium.
If you are wondering which one would be best for you, our review comparing the two services should help you make an informed decision.
Overall Rating: 4.2/5
Overall Rating: 4/5
About Motley Fool Stock Advisor
Both of these services have been in the game for quite a while. Whereas Motley Fool has been around since 2002, Zacks was founded in 1978, with the premium service being one of its recent inceptions.
Motley Fool Advisor offers the investors long-term picks, and it focuses on the stocks with the greatest potential for consistent growth.
The Advisor issues two picks per month, which are accompanied by in-depth research reports that explain the reasoning behind the picks.
Some of the best picks that the service has ever given include Amazon and Gilead.
About Zacks Premium
As for Zacks Premium, its outstanding feature is the Focus List, which is a compilation of 50 stocks selected by the service’s director of research. Each pick is accompanied by research reports that explain the rationale behind the decision.
There is also the #1 Rank List, which is a curated list, that is updated daily, of stocks that are rated highly by the service’s analysts as a Strong Buy. As a subscriber, you will get daily emails alerting you on the movements of the picks on this list.
Similarities Between The Two
To understand the similarities between the two services, we are going to discuss the Focus List that is found in Zack’s Premium.
Both Motley Fool and Zacks are targeting long-term investors who are planning to hold the stocks for several years going forward. On top of that, both services have a similarity in how they choose the stocks, in that it is based on basic features or catalysts.
By “catalysts”, we are talking about anything that has an impact on the price of shares to push it up or down. Examples include earnings reports, introduction of a new product, a major statement from the CEO, and so on.
Last but not least, the picks on both services are accompanied by detailed research reports that explain the rationale behind the selection.
When you consider other factors besides the Focus List, you are going to realize that there are glaring differences between the two services. This makes the ‘meat’ of our article, and we are going to analyze these differences in-depth.
1.The Investing Style
Although the investing style in Zacks Premium closely relates to those found in similar platforms, the stock-picking strategy of the #1 Rank List is a whole different story.
This list is based on several technical factors that are not named, and the analysts lean more towards earnings surprises.
On top of that, the list focuses on P/E ratios and other industry trends in conjunction with other technical indicators to determine which stocks make it to the list.
As for Motley Fool, things are more transparent. The stocks that you are recommended to buy come with detailed reports explaining why they are good buys.
You’ll also get to know more about the company, including their major clients. On top of that, you will find information on any risk factor to think about.
The final bit on Motley Fool is that the stock picks do not have to be new and you are likely to find repetitions over time.
2. The Resources
Motley Fool Stock Advisors offers two stock picks per month. Along these picks are in-depth research reports that explain the rationale behind the move.
Note that the analysis is restricted to the stocks in the current portfolio, and you will not find any general market commentary.
Zack Premium, on the other hand, has a broader range of resources. Besides the #1 Rank List and Focus List, the analysts rate other major stocks in the market on a scale of 1-5.
There is an algorithm grading stocks as momentum, value, or growth on an A-F scale. You may also find similar ratings for mutual funds exceeding 19,000.
Last but not least is the stock screener and stock lists that, according to analysts, will have positive or negative earnings surprises.
3. Performance Tracker
Although Zacks has not been tracking the Focus List over time, the performance of the #1 Rank List since 1988 is available. For all those years, the picks have averaged an annual return of 24.7%.
This is massive, especially when you compare it to 10.8% for the S&P 500 over the same duration.
It is important that you understand the significance of the #1 List ranking and it is as follows:
- Rank #1- Strong Buying Recommendation
- Rank #2- Buy Recommendation
- Rank #3- Hold Recommendation
- Rank #4- Sell Recommendation
- Rank #5- Strong Selling Recommendation
A ‘Strong Buy’ indicates that the stock’s earnings estimates are likely to rise while a ‘Strong Sell’ points to declining stock earnings.
As for Motley Fool, the track record is nearly as impressive, although for a shorter period, i.e., since 2002. The picks from this service have gains exceeding 300%, which translates to 16.6% per year.
4. The Format
Of the two services, we found that the Motley Fool Advisor is set up to be fairly simple. Every month, as a subscriber, you will receive an email with two new stock picks, and they are accompanied by research reports as an explanation for the decision.
The thing is that you are advised to buy these two stocks without paying attention to the entry or exit prices.
As for Zacks Premium, things are not that straightforward. For instance, the #1 Rank List features 20 stocks that are being added and removed on a daily basis. So, you can expect the volume of stock picks to be extremely high.
Further, there are no reports that would have helped you in making your decision. The positive bit with the Premium is that you will receive emails daily informing you of the new picks while also updating you on the market conditions.
What we can tell you is that these two services are some of the most affordable that you may ever find in the market.
To be specific, Motley Fool is cheaper, and it would cost you $199 per year. Even better is that there are discount offers that may lower the price down to $99 annually plus is risk-free with a 30-day trial period.
Zacks Premium is relatively pricey at $249 per year. On top of that, it comes with a 30-day trial period to allow you to decide whether or not the program is what you are looking for.
Which of The Two Is Better?
If you are having a hard time deciding on which one to pick, we are going to do a general summary of what these two services have to offer.
Let’s start with stock advice. With Zacks Premium, you find Zacks Rank #1 stocks, which are ideal for short term trading. Therefore, you can tell the direction in which the price will be moving for the next 1-3 months.
When it comes to Motley Fool Stock Picks, you will get specific stock picks that are ideal for long-term investment. On top of that, these picks come with detailed reports that explain the rationale behind the recommendation.
These reports are going to help you make an informed decision.
Another thing to talk about is the track record. Motley Fool has an impressive track record, with over 100 of its recommendations giving 100%+ returns.
Zacks Premium is equally impressive, and the service claims to have doubled the S&P 500 with an average annual return of 23.5%.
We could also compare the strategy associated with each of the two services. Motley Fool uses a strategy that involves strict selection criteria to make the recommendation. The strategy is time-tested and, therefore, very reliable.
On the other hand, Zacks Premium uses an indicator called ‘Earnings and estimate revisions’ plus a mathematical formula to come up with the stock rank.
Last but not least is the pricing. Both of them come with a 30-day trial period to give you time for trying out the product, and this makes them risk-free.
However, Motley Fool is less expensive, plus you can get a discounted offer on the annual cost.
To sum it all up, Motley Fool is our top pick. The service is very effective, plus there are no complications in any of its operations.
The service gives you the best picks, plus you will be advised on the best times to purchase them.
As we conclude this Motley Fool vs. Zacks duel, we would like to make one thing clear. Both are amazing stock picking services that have a long history of impressive performances.
The only bit is that Motley Fool is cheaper and simpler to understand, given that you only get two stock picks per month.
Zacks has a long list of picks, which is constantly changing, and this volume can be a bit overwhelming. So, if you end up with Zacks premium, self-drive would be a necessary virtue.
Blake is a self-made online day trader with a knack for adventure. On his free time, he loves reading and learning new methods in the trading as well as improving his jiu-jitsu skills. He currently resides in New York City.