For self-directed investors looking for stock recommendations, Zacks and Investor’s Business Daily (IBD) are two of the leading services available. Both platforms offer in-depth analysis of individual stocks, but ultimately leave it up to you to decide what to invest in and when.
In this comparison, we’ll focus specifically on Zacks and IBDs’ premium offerings: Zacks Premium and IBD Leaderboard.
About Zacks and Investor’s Business Daily
Zacks was founded in 1978 by Len Zacks, who believed that earnings estimates revisions are one of the best predictors of stock performance. The platform today provides research on thousands of stocks to help active investors figure out what to buy.
IBD was founded in 1984 by William O’Neill, the creator of the CANSLIM investing strategy. The main IBD platform provides market-wide news and analysis, while the Leaderboard service applies CANSLIM to identify potential investments. IBD also offers several other premium services, including SwingTrader, MarketSmith, and IBD Live.
Zacks vs. Investor’s Business Daily: Investing Style
Zacks and IBD use slightly different criteria to identify potential investments.
Zacks rates stocks based on three primary factors: value, growth, and momentum. These three categories include metrics such as price-to-earnings ratio relative to competitors, annual earnings growth, and recent price trends. Value, growth, and momentum scores are graded on a scale of A-F, making it easy to get a quick overview of where a stock stands.
In addition, Zacks specifically covers earnings estimate revisions. The platform makes it easy to find stocks with upcoming earnings that analysts believe will have positive or negative surprises.
IBD uses William O’Neill’s CANSLIM strategy to find investments. CANSLIM considers quarterly and annual earnings growth, new products and management, demand for a stock, a stock’s performance relative to competitors, institutional ownership, and overall market direction. IBD analysts then go even further, ranking stocks that meet CANSLIM criteria based on factors like price action.
Importantly, while these investing strategies differ, they’re not that far apart. Both Zacks and IBD are focused on finding stocks that have the fundamentals needed to outperform the market, and then consider technical factors like momentum to identify potential buying opportunities.
Zacks vs. Investor’s Business Daily: Stock Picks
Zacks groups stocks into five “rank lists” rated 1-5. The #1 rank list contains stocks that Zacks analysts believe are a strong buy, while the #5 list contains stocks they believe are a strong sell. From 1988 to 2021, the #1 rank list has delivered an average annualized performance of more than 25%.
The #1 rank list adds around 20 new stocks each day, and it typically contains hundreds of stocks. So, you will likely need to take advantage of Zacks’ built-in screeners to narrow down the list to just the stocks you’re most interested in researching.
Zacks also has a Focus list, which contains long-term investments that Zacks analysts think will outperform the market. The list is curated by hand and contains only around 50 stocks, so it’s a great place to start for building a portfolio.
IBD Leaderboard offers stock picks that are more similar to the Zacks Focus list than to the #1 rank list. A Top 50 list highlights the top 50 stocks that IBD analysts have found and that meet the requirements of CANSLIM.
A more focused Leaders list picks out 10-15 stocks that IBD analysts think are worth your attention right now. Each pick in the Leaders list comes with a recommended buy price and a recommended portfolio allocation, making it easy to follow the Leaderboard portfolio exactly if you want to. From 2015 to 2019, the Leaderboard portfolio returned 20.7% compared to 10.1% for the S&P 500.
The IBD Leaders and Top 50 lists add or remove only a few stocks each week, so they turn over more slowly than the Zacks #1 Rank List.
Zacks vs. Investor’s Business Daily: Technical Charts
One of the things that makes IBD Leaderboard unique is that each stock recommendation comes with an annotated technical chart. These charts display support and resistance levels, key technical patterns such as cups and handles, and entry and exit points. They’re incredibly useful for understanding the rationale behind a stock’s recommended buy point, especially for investors who aren’t experienced chartists.
Zacks offers integrated charts from TradingView, but they’re limited in scope and don’t include any annotations.
Zacks vs. Investor’s Business Daily: Stock Research
Zacks greatest strength is in the quality of its stock research. Every stock that Zacks covers comes with a detailed breakdown of its fundamentals, earnings potential, insider trades, and comparison to peers.
In addition, Zacks provides detailed analyst reports for all of the stocks on its Focus list and many of the stocks in its #1 rank list. These reports offer a closer look at why Zacks analysts believe a company is worth investing in and can help shape your thinking about whether to invest.
IBD Leaderboard offers much more limited stock research by comparison. Each stock in the Top 50 list receives grades for key fundamental and technical metrics, but you won’t find a detailed investment thesis for each company.
Zacks vs. Investor’s Business Daily: Pricing
IBD Leaderboard costs $69 per month or $699 per year. You can try out Leaderboard for 3 weeks for $9.95.
Which Platform is Better?
Zacks Premium and IBD Leaderboard both have strong track records and bring a lot to the table for self-directed investors. Zacks Premium may be the better option if you want to do your own stock research, including reading analyst reports for recommended stocks. Zacks Premium is also most effective for investors who feel comfortable using the integrated screeners to dig into the #1 rank list.
IBD Leaderboard, on the other hand, is slightly more akin to a stock picking service. It’s possible to follow the Leaderboard portfolio exactly using the Leaders list, but it’s also possible to do your own research and pick stocks from the Top 50 list. While IBD Leaderboard doesn’t offer quite as wide a range of top stocks as Zacks Premium, that can make it easier to narrow your focus without spending time screening.
Alternatives to Zacks and Investor’s Business Daily
Zacks and IBD are best suited for investors who want to do their own stock research rather than rely solely on stock picks. If you’re interested in long-term stock picks that don’t require much research, consider a service like The Motley Fool’s Stock Advisor. It offers two stock picks per month that you can act on immediately. As of March 2022, Stock Advisor has returned 494% since its inception in 2002 compared to 133% for the S&P 500 and costs $199 per year.
Zacks and IBD make it easier for self-directed and active investors to find high-quality stocks. Zacks Premium offers professional research on hundreds of top-ranked stocks, while IBD Leaderboard offers focused lists of stock picks with annotated technical charts. Zacks is best for investors who want to do their own research, while IBD is best for investors who want a combination of stock picks and research.