When it comes to picking stocks, The Motley Fool and Investor’s Business Daily (IBD) are two of the most highly respected services out there. Stock Advisor, The Motley Fool’s flagship subscription service, focuses on identifying high growth stocks early in their lifecycles and delivering long-term value. The IBD Leaderboard service, on the other hand, relies more heavily on technical analysis to find short and medium-term profits.
So, which stock picking service is right for you? Let’s take a closer look at how The Motley Fool Stock Advisor and IBD Leaderboard stack up.
About The Motley Fool Stock Advisor and IBD Leaderboard
The Motley Fool Stock Advisor service launched in 2002 with a focus on finding potentially explosive growth stocks. Among other picks, Stock Advisor recognized the value in companies like Costco, Amazon, Priceline.com, and Gilead long before they ballooned into the mega-cap stocks they are today. All told over the past 21 years, the service’s picks have generated a total return of more than 400%.
The main thing that you get with Stock Advisor is two stock recommendations each month. That may not sound like much, but these two picks are highly researched. They each come with an in-depth report into why the companies are poised for growth. Typically, Stock Advisor picks are meant to be held for at least a few years, so the service is best suited for long-term growth investors who are looking to buy and hold.
The IBD Leaderboard has been around since 2011 and also has a strong track record of beating the market. Stock picks are based on investor William O’Neal’s “CAN SLIM” strategy (more on that later), so they tend to be short to medium-term picks based on a combination of fundamental and technical signals.
IBD Leaderboard is a bit more involved than Stock Advisor. The in-depth research is similar, but each pick is accompanied by annotated technical charts that illustrate entry and exit targets, stop levels, and more. The system is still easy to follow, but it requires significantly more attention on a day-to-day basis than Stock Advisor’s monthly picks.
Similarities
The Motley Fool Stock Advisor and IBD Leaderboard are both stock picking services that offer detailed stock research in addition to picks. To an extent, both services rely on fundamental information, particularly with respect to growth potential – although this is true to a much greater extent for Stock Advisor.
Beyond a slight overlap in fundamental analysis, these two services don’t actually have much in common.
Stock Advisor vs. IBD Leaderboard: Stock Picks
Stock Advisor and IBD Leaderboard use entirely different systems for picking stocks. So, it should come as little surprise that they’ve had very different results.
Investing Style
The Motley Fool’s Stock Advisor service is built entirely on fundamental analysis. The analysts behind the service look through company financials, management teams, and industry trends in order to pick out companies that they think are gearing up for big growth.
Picks aren’t based on technical analysis at all, and Stock Advisor doesn’t issue guidance about the best intraday price at which to buy a stock. Instead, stocks tend to show up as Stock Advisor picks when they’re trading at a much lower P/E ratio compared to the rest of the sector or when there are specific catalysts like an upcoming product release. Stocks may also appear as picks without a catalyst, based on underlying trends in the domestic or global markets.
Stock Advisor picks are meant to be held for at least 3-5 years, and some stocks have been in the portfolio for more than 10 years. Stock Advisor will issue alerts when it’s time to sell a stock, but there are no stop losses or other exit guidelines that accompany each pick.
The IBD Leaderboard uses the “CAN SLIM” strategy, which is based on a combination of fundamental and technical factors:
- Current quarterly earnings
- Annual earnings growth
- New products or services
- Supply and demand
- Leader or laggard
- Institutional sponsorship
- Market direction
Generally speaking, stocks that appear on the IBD Leaderboard have some of the same fundamental qualities as stocks that could appear in Stock Advisor. They are exhibiting earnings growth or have a specific catalyst, such as a new project line, that offers reasons to be optimistic about the future of the company.
However, on top of that, stocks must also have bullish technical signals to be chosen for the IBD Leaderboard. Picks are typically accompanied by specific entry prices, price targets, and stop loss prices. The typical holding period is a few months.
Track Records
The Motley Fool Stock Advisor has been around significantly longer than the IBD Leaderboard, so it has the longer track record. It’s also an impressive track record – Stock Advisor has generated returns of over 400% over the past 21 years.
IBD Leaderboard doesn’t publicize its returns since 2012, but claims a 35.6% return over the course of the past three years (compared to 18.8% for the S&P 500). That includes 2022, when both Stock Advisor and the S&P 500 lost money.
Pick Format
The ways that Stock Advisor and IBD Leaderboard present their picks differ quite a bit as well. With Stock Advisor, subscribers get an email roughly every two weeks with the latest stock pick. You can log into the Stock Advisor dashboard to read the full research report accompanying the new pick.
With IBD Leaderboard, you have a lot more material to keep an eye on. There are emails, an online dashboard, and a mobile app where you can monitor the latest updates to the leaderboard. Each pick has a short stock research summary accompanying it, similar to the Stock Advisor research summaries. You also get an annotated technical chart that delineates entry and exit points and stop loss levels. Helpfully, it also explains the trading strategy behind the technical pattern that’s pinpointed.
Motley Fool vs. IBD Pricing Comparison
Stock Advisor is significantly cheaper than IBD Leaderboard. The Motley Fool’s service costs just $199 per year (you can get your first year for only $79). That’s compared to $69 per month or $699 per year for IBD Leaderboard.
Stock Advisor doesn’t offer a free trial, but there’s a 30-day money-back guarantee. IBD Leaderboard offers a 3-week trial for $9.95.
Resources Comparison
Both Stock Advisor and IBD Leaderboard offer a nice array of resources. To start, each service includes research reports on each of the stocks that are recommended. These are a bit more in-depth for Stock Advisor, but IBD Leaderboard doesn’t cut corners when discussing a stock’s potential, either. Each service also includes market commentary, although this is updated more frequently for IBD Leaderboard.
One advantage to Stock Advisor is that it offers two stock lists for investing anytime. The first is a ranking list that highlights the top stocks already in the portfolio to double down on. The second is a foundational stocks list, which Motley Fool analysts think every growth investor should own. These lists can be very helpful if you have some money to invest and don’t want to wait for the next pick.
Which Service is Better?
Both Stock Advisor and IBD Leaderboard are strong services with a history of beating the broader stock market. But, Stock Advisor wins handily in this comparison. It’s significantly cheaper, has a better track record over the past few years, and requires less day-to-day work on the part of investors.
IBD Leaderboard may be better for investors who want short-term trading action, but it’s hard to justify the high cost compared to Stock Advisor. At the end of the day, you’ll spend more time managing your portfolio and end up with less return than Stock Advisor.
If you like to do your own stock research and want to pick and choose which stock recommendations to follow, you could use either service. However, we still think Stock Advisor is the better option thanks to its affordable pricing and in-depth research reports.
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Want to learn more about these services? Read our Motley Fool Stock Advisor review and IBD Leaderboard review for an in-depth analysis of each service.
Alternatives to Stock Advisor and IBD Leaderboard
For some investors, Stock Advisor and IBD Leaderboard can fall short in that they don’t provide enough information to research your own stock picks. If you need tools to identify stocks rather than ready-to-buy picks, some good options include Zacks Premium, Seeking Alpha, and Morningstar Premium.
Zacks Premium offers a list of around 100 highly ranked stocks along with in-depth fundamental analysis. Seeking Alpha has one of the best stock screeners around and gives you access to tons of research from analysts, financial bloggers, and more. Morningstar Premium is mainly aimed at value investors and fund investors.
Conclusion
For the majority of investors, The Motley Fool’s Stock Advisor service is a better option than IBD Leaderboard. It’s not only significantly cheaper, but requires less day-to-day monitoring of the market and has a stronger track record over both short and long timeframes. That’s not to put IBD Leaderboard down, as it is a strong stock picking service that performs well on a mix of technical and fundamental signals. However, Stock Advisor sets a high bar and it’s one of the best services available for long-term investors.
