Action Alerts Plus Review
Action Alerts Plus is an online stock recommendation platform. Run by well-known analyst, Jim Cramer, Action Alerts Plus has a variety of things to offer its user. Read our review to learn more about Action Alerts Plus and what this platform can do for your trading.
Introduction To Action Alerts Plus
Action Alerts Plus is the online stock recommendation platform run by well-known analyst Jim Cramer. The platform displays Cramer’s recommended portfolio, recommends stocks to buy and sell, and offers analysis from Cramer’s team on how stocks within the portfolio are moving. Compared to similar stock picking guru platforms like GorillaTrades, Action Alerts Plus uses scaling in and out of positions more heavily and provides more analysis of individual picks. Overall, Action Alerts Plus is a good option for medium- to long-term traders who want to actively invest, but need guidance from experienced analysts on which stocks are worthwhile at any given time.
Action Alerts Plus requires a subscription, which can be purchased monthly, annually, or biannually. A monthly subscription costs $59.95 per month ($719.4 per year), an annual subscription costs $299.95, and a two-year subscription costs $499.95. Action Alerts Plus also offers a free two-week trial.
This pricing falls inline with similar services. It’s cheaper than Gorilla Trades but pricier than the Stock Advisor Program by Motley Fool. Like most stock recommendation services, the subscription cost is nominal if the stock picks deliver. Let’s take a closer look at this service.
The trading strategy used by Action Alerts Plus focuses on a well-balanced mix of value and growth stocks, making it appealing to both medium and long-term investors. Cramer splits the recommended portfolio into value, growth, blend, and income stocks, although the exact distribution of positions in each of these categories changes over time. Within value stocks, Cramer recommends a series of “core holdings” that represent fundamentally sound companies that should be held for years at a time.
In contrast to stock picking platforms such as GorillaTrades, the Action Alerts Plus strategy relies very heavily on scaling into and out of positions. Many of the trading actions recommended on the platform involve buying more of a stock that is already in the portfolio during a pullback, or selling piecemeal on strong trading days. It is worth noting that while this strategy can be effective at mitigating risk, it does incur significantly higher commission fees and requires more active trading than other stock recommendation systems.
Overall, the Action Alerts Plus strategy appears to be successful on the whole, with many historical stock picks returning gains of more than 20%. However, Cramer’s strategy makes no mention of stop losses and does not recommend sell points. As a result, there are many stock picks that lose more than 10% of their value before being removed from the portfolio.
Action Alerts Plus Features
The portfolio is a spreadsheet-style listing of all stocks currently recommended by Cramer and the Action Alerts Plus team. From there, it is possible to quickly see the gain or loss of a particular stock in the portfolio, the recommended price target, and the stock’s overall weight in the portfolio. Traders can also see the full history of closed positions and trades made by the Action Alerts Plus platform to get an idea of the platform’s past history with any particular stock.
In addition, every stock is issued a rating on a scale of one to four, indicating whether Cramer recommends buying more of the stock, waiting for a pullback, or selling. However, it is important for investors to keep in mind, given the trading system’s method of scaling in and out, that they will need to do some research on their own to find buy and sell levels within this rating system.
Alerts and Analysis
The analysis posts issued with every trade that Cramer makes are among the best features of Action Alerts Plus. Trade alert posts are typically brief – a few paragraphs – but give insight into the reasoning why Cramer is recommending a specific trade at a specific time. Typically, this analysis is focused more on stock fundamentals and current news than technical indicators. In addition, Cramer’s analysis usually requires some additional reading, of previous trade alerts, external news articles, or of the weekly newsletter, for additional context.
In addition, Cramer and the analysis team regularly issue analysis posts, which are not pegged to a specific recommended trade but rather discuss stocks that the team is watching or already holds in the Action Alerts Plus portfolio. These posts are typically longer and more in-depth, but similar to alerts they focus on current events and changes in fundamentals to assess the potential value and risk of a stock going forward.
Weekly roundups are another form of in-depth analysis, but rather than focusing on specific stocks these end-of-week newsletters are focused on the market and economy as a whole. The newsletter provides a summary of key economic indicators, as well as investor reactions to notable earnings reports and world events that are shaping the markets.
The Action Alerts Plus team also runs a forum on the platform. However, in contrast to typical forums, this is structured as a question-and-answer forum directly for the analysis team rather than as a place for users to answer each other’s questions.
Action Alerts Plus is differentiated from other stock recommendation platforms by its in-depth analysis of all trades and its focus on creating a balanced portfolio of value and growth stocks. The analysis can be difficult to parse since it requires researching external news articles and following stocks closely, but having the option to dive into why Cramer recommends buying a stock at any given time is useful for active investors who want to learn more. At the same time, more passive investors will appreciate that Cramer limits risk in the portfolio by offering “core holdings” and differentiating between value and growth stocks. However, Action Alert Plus’s strategy of scaling positions heavily can be costly in commission fees and the practice of ignoring stop losses has historically led to massive individual trade losses on the platform.
What Type of Trader is Action Alerts Plus Best For?
Action Alerts Plus is best for value-driven investors who want to invest on both medium and long timescales. Furthermore, since the platform focuses on stock recommendations, it is ideal for traders who have some knowledge of how the market works, but who are not comfortable doing their own fundamental or technical analyses. Given the Action Alerts Plus strategy’s focus on scaling positions, the platform is more suitable for traders who take an active role in their investments and watch the market daily than for passive investors.
- Stocks are divided into value, growth, blend, and income categories
- History of solid overall performance
- Portfolio picks are rated on a one to four scale
- Stock picks are accompanied by in-depth analysis
- Weekly roundups cover market-wide trends and news
- Relies heavily on scaling positions, which results in high commission fees
- No direction on placing stop losses on positions