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 finding stocks to recommend. 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. The Motley Fool was founded in 1993, with the Stock Advisor launching in 2002. Zacks has been around since 1978, although the Premium service is just the latest incarnation of a variety of paid services the platform has offered over its 42-year history.
The Stock Advisor service is built around offering investors long-term stock picks. 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 Stock Advisor. Both services choose 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.
Stock Advisor vs. Zacks Premium: Stock Picks
However, once you get away from the Focus List in Zacks Premium, the service looks very different from Stock Advisor.
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 and technical factors that Zacks doesn’t specifically name. Zacks analysts seem to give more weight to 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.
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.
The Motley Fool Stock Advisor has a shorter, but nearly as impressive track record. Since 2002, the service’s picks have returned gains of more than 300%. That’s an average of around 16.6% per year.
Stock Advisor keeps things fairly simple. Once per month, subscribers receive an email containing two new picks and the research reports to back them up. Typically, these stocks are meant to be bought at that time, without consideration to technical setups or entry and exit prices.
Zacks Premium is a bit more complicated. The #1 Rank List can see more than 20 new stocks added and other 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.
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 per year. Zacks Premium is slightly more expensive, at $249 per year.
The Motley Fool Stock Advisor primarily 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.
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 scale from 1-5. An algorithm grades stocks as value, growth, or momentum on an A-F scale. The same ratings are also available for more than 19,000 mutual 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 closely matched in returns once you account for the high volume of trades involved in the #1 Rank List. In addition, the pricing differential isn’t so great as to push most investors towards one service over the other.
So, Stock Advisor is better if you want to take a hands-off approach to investing. It only requires placing two trades per month and doesn’t take much day-to-day attention. It’s a simple and effective system for buy and hold investors.
Zacks Premium may be better if you have a mixed trading strategy and time to think about your portfolio every day.
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.