When it comes to investing in stocks, having access to high-quality research and analysis can make a big difference in your returns. Two of the most popular stock research services are Zacks Investment Research and Motley Fool. But which one is better for your needs?
In this comprehensive guide, we'll compare Zacks and Motley Fool on key factors like stock picks, research methodology, tools/resources, costs, and more. By the end, you'll have a clear understanding of the pros and cons of each service so you can decide which is the better fit.
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Overview of Zacks
Zacks Investment Research was founded in 1978 by Len Zacks and provides investment research for individual investors. The company is best known for its Zacks Rank system, which uses earnings estimate revisions to rank over 4,000 stocks from #1 (Strong Buy) to #5 (Strong Sell).
Some key things to know about Zacks:
Overview of Motley Fool
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Founded in 1993 by David and Tom Gardner, The Motley Fool aims to help individual investors through stock recommendations and education. The Motley Fool has grown into a multimedia financial services company.
Here are some key highlights about Motley Fool:
Now that we've covered the basics on each research service, let's compare them across a few key categories.
Zacks vs Motley Fool: Stock Picks & Analysis
One of the most important factors to consider is how each service approaches stock analysis and generating picks.
Zacks Stock Analysis Approach
The Zacks Rank is the heart of Zacks' stock analysis. As discussed earlier, it uses earnings estimate data to rank each stock from #1 to #5. #1 Ranked stocks are expected to outperform the market over the next 1 to 3 months.
Here are some notes on the Zacks Rank system:
In addition to the Zacks Rank, Zacks provides other stock ratings like the Zacks Style Scores which grade stocks based on valuation, growth, and momentum factors. But overall, Zacks' stock analysis leans on quant models and data.
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Motley Fool Stock Analysis Approach
Unlike Zacks, Motley Fool relies more on traditional fundamental analysis done by its team of analysts. Picks are based on qualitative factors like:
Motley Fool is less concerned with short-term data points. It focuses on high-quality growth stocks that can be held for 5+ years. Analysts provide reasoning behind each stock pick to help investors understand the long-term potential.
Comparing the Stock Analysis
In summary, there are clear distinctions between Zacks and Motley Fool's stock analysis:
So Zacks may be preferable for short-term traders playing trends and momentum while Motley Fool caters more to long-term investors looking at high-growth stocks.
Investment Newsletters & Stock Picks
Both Zacks and Motley Fool offer various stock picking newsletters, so let's see how their offerings compare:
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Zacks Investment Newsletters
Zacks has a suite of newsletters that provide stock picks based on different strategies:
Most newsletters cost between $249 to $299 per year. Zacks Premium is the most expensive at $399 per year.
Motley Fool Investment Newsletters
Some of Motley Fool's most popular stock advisories include:
Most Motley Fool newsletters cost between $99 to $299 per year. Its most expensive service is Million Dollar Portfolio at $1,999 per year.
Comparing the Investment Newsletters
While both Zacks and Motley Fool offer a range of investment newsletters, there are some notable differences:
So Zacks offers more tools for short-term trading across all stocks while Motley Fool provides long-term growth opportunities at a lower cost.
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Research Methodology
Let's look at how Zacks and Motley Fool go about researching stocks:
Zacks Research Methodology
As discussed earlier, Zacks focuses heavily on quantitative analysis. Some keys to its methodology:
Scores that power its stock analysis.
Overall, Zacks leverages models, algorithms, and data to quickly identify stocks with short-term upside potential.
Motley Fool Research Methodology
Motley Fool conducts fundamental analysis on stocks using traditional techniques:
Overall, Motley Fool takes a traditional, fundamental analysis approach but with a fun, engaging twist. The goal is to uncover stocks to buy and hold for the long-term.
Comparing the Methodologies
In summary:
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So Zacks will appeal more to quantitative investors and short-term traders while Motley Fool is better for long-term investors who appreciate analyst narratives.
Zacks vs Motley Fool: Tools & Resources
In addition to stock picks, both services provide various tools and resources for investors:
Zacks Tools & Resources
Zacks offers many tools beyond just stock recommendations:
Zacks focuses heavily on screening tools and quantitative research capabilities. Everything is centralized under Zacks Premium.
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Motley Fool Tools & Resources
Some tools provided beyond Motley Fool’s stock picks include:
Overall, Motley Fool focuses on investor education through podcasts, starter guides, community forums, and live events.
Comparing the Tools & Resources
The key differences in the tools provided:
So Zacks caters more to investors who value screening and tracking capabilities while Motley Fool is better if you prefer analyst narratives and education.
Costs of Zacks vs. Motley Fool
Let's compare the costs across the different offerings from each research provider:
Zacks Pricing
Here are the annual prices for key Zacks services:
Motley Fool Pricing
And here are the annual costs for popular Motley Fool advisories:
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Comparing the Costs
A few observations when comparing the pricing:
Overall, Motley Fool generally offers lower-priced options for stock picks, though Zacks Premium provides its entire platform for $399 per year. Motley Fool has a high-end $1,999 per year portfolio option.
Zacks vs. Motley Fool: Which is Better?
So which stock research service is better for your needs? Here is a quick recap:
Zacks caters to quantitative, short-term traders. Motley Fool appeals more to fundamental, long-term investors.
Ultimately there is no definitive “better” service. It depends entirely on your personal investing style and preferences.
Both Zacks and Motley Fool offer significant value – just in different ways. Most investors would benefit from having both perspectives.
Top 10 Frequently Asked Questions
1. Is Zacks better than Motley Fool?
There is no clear “winner” between Zacks and Motley Fool. Zacks is better if you want quantitative analysis and short-term trading ideas. Motley Fool is preferable for fundamental analysis and long-term investing approach.
2. How accurate are Zacks stock picks?
Based on backtesting studies, Zacks' stock picking services can on average identify stocks that outperform the S&P 500. However, not all picks are profitable and past performance is no guarantee of future results.
3. Is Motley Fool worth paying for?
Motley Fool is considered one of the better stock advisory services. Their Stock Advisor newsletter has averaged over 20% annual returns since 2002. However, individual results will vary for investors.
4. Does Zacks have a free trial?
Unfortunately Zacks does not currently offer free trials. You have to pay upfront for a Zacks Premium or newsletter subscription. But they do have a 30-day refund policy if you are unsatisfied.
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5. Is Zacks Premium worth it?
For active traders and investors, Zacks Premium can be worth it for the screening tools, proprietary research reports, data, and site access. But for long-term investors, Motley Fool advisories provide sufficient value at a lower annual cost in most cases.
6. What happens if I cancel Motley Fool?
If you cancel your Motley Fool newsletter, you simply won't get any new stock picks – but you can continue holding or tracking previously recommended stocks. Any resources you accessed will no longer be available unless you restart your subscription.
7. Does Motley Fool beat the market?
Motley Fool's Stock Advisor flagship newsletter has beaten the S&P 500 in most years since launching in 2002. But individual returns vary based on the specific stocks purchased. Motley Fool's goal is to beat overall market returns over the long-run.
8. Can you make money with Motley Fool stock picks?
Yes, you can make money if you invest in Motley Fool's stock picks. According to Motley Fool, their past Stock Advisor recommendations have averaged 72% return vs. 95% for the S&P 500. However, your personal returns will depend on the timing of buys/sells.
9. Does Zacks recommend stocks to buy now?
The Zacks Rank helps identify stocks with potential over the next 1-3 months. Zacks also provides top stock ideas each week and month. But you should do further research before buying stocks based only on Zacks recommendations.
10. Which is better: Zacks or Morningstar?
Zacks provides more tools for screening and quantitative analysis. But Morningstar offers in-depth, qualitative fundamental analysis on stocks and funds. Different investors will prefer one over the other depending on their focus on qualitative vs. quantitative research.
In summary, there is no definitive "winner" between Zacks and Motley Fool. Choose based on your preferences for research style and investing approach. Combining insights from both services can give you a valuable overall perspective as an investor.