The Motely Fool’s Stock Advisor and Zacks Premium are both fairly affordable stock picking services. Although both services place an emphasis on growth and momentum stocks, Stock Advisor and Zacks Premium use entirely different strategies for making stock recommendations. Stock Advisor also only issues two long-term stock picks per month, while Zacks Premium updates daily and has a much wider variety of picks.
So, which of these services is the right one for you? Let’s take a closer look at how The Motley Fool Stock Advisor and Zacks Premium compare.
About The Motley Fool Stock Advisor and Zacks Premium
Both the Motley Fool and Zacks have long histories and are reputable companies in the space.
The Motley Fool was founded in 1993 by Tom and David Gardner, with the flagship Stock Advisor newsletter launching in 2002. Zacks Investment Research has been around since 1978, although the Premium service is just the latest incarnation of a variety of services this investment advice company has offered over its 42-year history.
The Stock Advisor service is built around offering long-term investors stock picks that will outperform the market. It aims to highlight stocks that are poised for significant, sustained growth. Some of the service’s best picks in that regard are companies like Costco, Amazon, and Gilead, all of which Stock Advisor highlighted before their prices shot up. Stock Advisor only issues two picks per month, but they’re accompanied by in-depth research reports that explain the rationale behind the picks.
Zacks Premium has a mix of services packed in. The most similar option to Stock Advisor is the Focus List, which is a list of 50 stocks to buy and hold selected by Zacks’ director of research. As for Stock Advisor, these picks come with detailed research reports.
But, most investors use Zacks Premium not for the Focus List, but for the #1 Rank List. This is a curated list, updated daily, of stocks that Zacks analysts rate as Strong Buy. They’re categorized as value, growth, or momentum stocks, and subscribers get a daily email alerting them to movements in this list of stock picks.
When considering just the Focus List in Zacks Premium, the service actually has a lot in common with The Motley Fool’s Stock Advisor. Both services choose growth stocks based on fundamental features or catalysts and expect investors to hold them for a period of several years or longer. In addition, both Stock Advisor and Zacks Premium issue detailed research reports with these picks in order to explain the rationale behind them.
Let’s look at a few key features of each service to see which service is better for you.
Stock Advisor vs. Zacks Premium: Stock Picks
Both Zacks Premium and Motley Fool Stock Advisor are intended to help investors choose better stocks. Both services are geared towards a mix of beginner and advanced investors rather than one or the other. However, they go about making stock recommendations in different ways.
The investing style behind the Focus List in Zacks Premium mimics the style behind all Stock Advisor picks. But, the meat of Zacks Premium is the #1 Rank List, which operates using an entirely different stock-picking strategy.
This list is based on a combination of fundamental analysis and technical factors that Zacks doesn’t specifically name.
Zacks analysts seem to give more weight to earnings momentum and earnings surprises (the service specifically monitors earnings surprises) than most other stock-picking services.
Zacks #1 Rank List picks also reflect P/E ratios and industry trends, along with technical features that help determine exactly when a stock should make or be removed from the list.
Zacks doesn’t publish a track record for its Premium service overall or its Focus List in particular. But, the company has tracked the performance of its #1 Rank List since 1988. Over more than 30 years, those picks have returned an average of 24.7% per year (compared to 10.8% for the S&P 500 over the same period).
It’s also worth noting that Zacks Premium offers a money-back guarantee for investors who underperform the S&P 500 while using the service (although we haven’t put this to the test).
However, keep in mind that this performance is based on the entire #1 Rank List. That’s a massive volume of stock picks each year, so most investors won’t be able to actually match the portfolio performance. While the performance is impressive, it’s not necessarily representative of the returns that a member may achieve.
The Motley Fool Stock Advisor has a shorter but nearly as impressive track record. Since 2002, the service’s picks have returned consistently beat the S&P 500. Stock Advisor members can access a list of every stock pick the company has ever made (which can actually be very helpful for idea generation). The stock picking service is transparent about its track record, and rightfully so, considering the returns.
Stock Advisor keeps things fairly simple. Every month, members receive two new stock picks and research reports to back them up.
Typically, these stocks are meant to be bought at that time without consideration of technical setups or entry and exit prices. Current stock prices aren’t much taken into account as long as the company has room for growth. Motley Fool stock picks are intended to be held for at least 3-5 years.
Zacks Premium is a bit more complicated. There are several Zacks rank lists, ranging from #1 (strong buy) to #5 (strong sell). The #1 Rank List can see more than 20 new stocks added and removed on a daily basis. This creates an enormous volume of stock picks, and they typically don’t come with any research or explanation to help investors choose which ones to follow. Helpfully, Zacks Premium subscribers do get a daily email that highlights the new picks and provides updates about market conditions.
Motley Fool’s stock picks are much easier to follow, whereas Zacks picks require some research on the part of the investor.
This is actually one of the bigger differences between the new services. Motley Fool tells members exactly which stocks to buy and when, whereas Zacks simply provides a list of top-rated stocks.
The Motley Fool Stock Advisor is one of the most affordable stock-picking services on the market. It’s priced at $199 per year, although it’s easy to find a discount to bring the price down to just $99 for the first year.
Zacks Premium is slightly more expensive, at $249 per year. That said, both services are affordable and fairly priced when compared to other services in the space.
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The Motley Fool Stock Advisor offers in-depth research reports around the two stock picks each month. The service doesn’t provide commentary on the broader market or analysis of stocks beyond the current portfolio. There also aren’t any portfolio management tools built in.
Zacks Premium, on the other hand, offers a basket of resources. In addition to the Focus List and #1 Rank List, Zacks offers analyst ratings around just about every other major stock on a stock rank scale from 1-5. An algorithm grades stocks as value, growth, or momentum on an A-F scale. The same stock ratings are also available for more than 19,000 mutual funds. (Neither The Motley Fool or Zacks cover exchange-traded funds.) On top of that, Zacks Premium includes a helpful stock screener and lists stocks that Zacks analysts think will have a positive or negative earnings surprise.
Which Service is Better?
Stock Advisor and Zacks Premium are both high-quality services. It’s difficult to label a clear winner since both services take unique approaches to stock analysis. The winner will come down to your personal preferences.
The Motley Fool Stock Advisor program is ideal for beginner investors who simply want stock picks that will outperform the stock market. As a Stock Advisor member, you will get two fresh picks every month and access to all of the previous stock picks. These picks have been outperforming the S&P 500 for almost two decades. To learn more, read our Motley Fool review.
Zacks Premium is ideal for investors who want to generate investment ideas that they will research on their own. In this sense, it’s more similar to Seeking Alpha (albeit a bit simpler to use). There is a lot more work involved in researching these picks since Zacks covers far more stocks. Zacks picks are really more like “rankings” vs. explicit stock picks. Zacks offers a lot of great tools for self-directed investors who enjoy doing their own research to find the best stocks.
If we had to choose one service, our winner between the two is The Motley Fool simply because of how straightforward and cost-effective the service is. At only $99 for the first year, it’s hard to go wrong. Furthermore, the Stock Advisor program is incredibly easy to follow. You get told which stocks to buy and what times to buy them.
Zacks is a great service, but it requires a bit more self-management. To learn more, read our full Zacks Premium review.
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The Motley Fool Stock Advisor and Zacks Premium are both excellent stock-picking services with long histories of outperforming the S&P 5000. Stock Advisor offers a cheaper and simpler service, with just two stock picks per month for investors to buy and hold. Zacks Premium issues numerous picks on a daily basis, which can be somewhat overwhelming. But, this service also offers a Focus List that’s more similar to Stock Advisor, plus a wealth of tools for self-directed stock research and mutual fund investing.