The Motley Fool’s Stock Advisor service and Morningstar Premium are two affordable and easy to use investing services. But, they differ in a few important ways.
Stock Advisor focuses primarily on identifying a small number of value stocks with high growth potential for long-term stock investors. Morningstar Premium offers analyst ratings for a huge number of stocks, but many of the platform’s best features are built around mutual fund investing.
So, which of these services is right for you? In this article, we’ll take a closer look at how Stock Advisor and Morningstar Premium stack up and what types of investing styles they’re suitable for.
- About The Motley Fool Stock Advisor and Morningstar Premium
- Motley Fool vs. Morningstar: Similarities
- Motley Fool vs. Morningstar: Differences
- Pricing Comparison For Motley Fool vs Morningstar
- Resources Comparison
- Which Service is Better?
About The Motley Fool Stock Advisor and Morningstar Premium
Morningstar was founded in 1984 and has become one of the most respected investment analysis firms, especially when it comes to mutual fund research. A significant portion of the company’s business centers around helping investors make better, more informed decisions about managing their portfolios. Morningstar also has an asset management arm with more than $220 billion under management.
The Motley Fool was founded in 1993 and launched the Stock Advisor service in 2002. Stock Advisor is selective in picking stocks – you only receive two recommendations each month – but the service has racked up some impressive calls throughout its history. For example, Stock Advisor saw the potential of companies like Costco, Amazon, and Gilead long before the rest of the market caught on.
Motley Fool vs. Morningstar: Similarities
The main similarity between Stock Advisor and Morningstar Premium is that both services offer stock analysis. But, even that similarity only extends so far, because the way they go about analyzing stocks is very different. Stock Advisor offers in-depth research reports on a small number of stocks, whereas Morningstar’s analysis is broad and focuses on whether a stock is trading above or below its analysts’ price targets. You will find more detailed news articles with analysis in Morningstar, but most of these are available to free users and not just subscribers.
Motley Fool vs. Morningstar: Differences
The biggest difference between The Motley Fool’s Stock Advisor and Morningstar Premium is that they cover different assets. Stock Advisor is focused solely on stocks, and only high-growth value stocks at that.
Morningstar has a much wider scope, with analysis covering stocks, bonds, ETFs, and mutual funds. In fact, Morningstar is generally more concerned with mutual funds than with stocks, and much more so than most comparable stock-picking services. You’ll find that while Morningstar Premium includes stock rating lists, a lot of what you’re paying for with this platform are tools built around mutual fund discovery and analysis.
The way that Stock Advisor and Morningstar present stock picks is extremely different.
Stock Advisor is essentially a newsletter that arrives in your inbox once per month. The newsletter will contain a long research report that makes the case for why two companies, the newest picks, are undervalued and poised for growth. In the newsletter, you’ll also get brief updates on all the other picks in the Stock Advisor portfolio and advice on removing old picks from the portfolio as needed.
Morningstar Premium doesn’t have an ongoing portfolio, but rather maintains lists of stocks that are valued below what the company’s analysts believe they’re worth. These lists are updated on a daily basis, and while they typically don’t turnover in less than a few weeks, there are many more stock picks at any given time than you’ll find in the Stock Advisor portfolio.
Importantly, Morningstar has multiple different lists of stocks worth your attention. This is good in that you can decide what types of stocks you want to invest in – for example, wide-moat stocks or highly undervalued five-star stocks. On the other hand, since you’re dealing with hundreds of potential recommendations, you’re left to do your own research to figure out which stocks are the best bet.
Analysis and Discovery Tools
Simply put, Stock Advisor doesn’t have any stock analysis or discovery tools. You’re presented with two new companies each month and that’s about it. The service doesn’t include a stock screener, news, or any other tools you can use to find additional investments.
Morningstar may require more research, but it also puts the tools you need to do that research at your disposal. You can find detailed fundamental information and news about any of the individual stocks that show up in the recommendation lists. Better yet, most stocks are accompanied by a brief analyst report that explains the recommendation, and you can view the entire history of past analyst reports for that company. Morningstar also offers a fair value estimate to Premium subscribers, which can give you more information on the potential gains from an investment.
Since Morningstar leaves investors to build their own portfolio, it’s not possible to calculate a historical performance. But, keep in mind that this firm has been around for more than 35 years and is a behemoth in the stock and fund analysis space.
Stock Advisor has an extremely impressive historical performance. The service’s picks have returned around 300% over the past 18 years, for an average of 16.6% per year. That’s well above the return of the S&P500 over the same time period.
Pricing Comparison For Motley Fool vs Morningstar
Both Morningstar Premium and The Motley Fool Stock Advisor cost $199 per year. However, it’s easy to find a discount to bring the cost of a Stock Advisor subscription down to $99 per year. In any case, neither of these services are particularly expensive.
Stock Advisor has great stock picks, but it’s fairly light on additional resources. You don’t get access to any tools outside the once-monthly newsletter, and there’s rarely commentary on the market beyond the current portfolio.
Morningstar Premium, on the other hand, is rich with resources. You not only get analyst reports for a huge number of stocks, but you also get a look at important metrics like fair value. Morningstar Premium subscribers also get access to a premium mutual fund screener and stock news articles that aren’t available to the public. It’s worth noting that while Morningstar also offers a massive amount of fundamental data about US stocks, most of this data is free to access without a subscription.
Which Service is Better?
Ultimately, whether Stock Advisor or Morningstar Premium is better comes down to what you’re looking for. They’re both excellent services that easily justify their prices.
Stock Advisor is better for long-term investors who don’t want to do a lot of their own research or who only want to buy stocks once a month. The recommendations are easy to follow even if you don’t read the research reports in their entirety. Given this service’s track record, it’s a fair bet that you can blindly follow the recommendations and come out okay.
Morningstar is better for investors who want to buy stocks on a shorter-term basis or who want a wider selection of recommendations to choose from. Importantly, Morningstar Premium users will need to be comfortable doing their own fundamental analysis to some extent to decide which of the many recommended stocks are right for their portfolios. If you are interested in investing in mutual funds in addition to stocks, Morningstar Premium is one of the most well-equipped services for this purpose.
Zacks Premium is a close competitor to both Stock Advisor and Morningstar Premium. Like Morningstar, Zacks gives users numerous lists of stock recommendations and allows them to build their own custom portfolios. However, Zacks doesn’t offer as much in the way of analyst briefings as Morningstar, and the recommendation lists turnover extremely quickly. It’s also more expensive – an annual subscription costs $249 per year.
IBD Leaderboard is another alternative that offers analyst reports and a laundry list of recommendations. This service is more oriented towards technical trading, as every pick comes with an annotated chart to delineate entry and exit points. But, for long-term traders, IBD Leaderboard can be prohibitively expensive. The service costs $69 per month.
Both the Motley Fool Stock Advisor and Morningstar Premium are excellent, affordable services that can help long-term investors profit. Stock Advisor is simple to follow and has a strong track record, but it can leave something to be desired for investors who are looking to build a diversified portfolio quickly. Morningstar Premium requires more self-directed analysis, but it offers a wealth of information and can help you supplement individual stock picks with mutual fund investments.