Zacks vs Motley Fool: Which Stock Research Service is Better in 2024? (2024)

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.

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:

• Quantitative investment research: Zacks focuses heavily on quantitative analysis and models to generate stock recommendations. Its rankings and ratings are driven by data and algorithms.
• Earnings-based stock picking: At its core, the Zacks Rank looks at earnings estimate revisions from brokerage analysts to find stocks primed for upside surprises. Stocks with rising earnings estimates get a better Zacks Rank.
• Short-term trading approach: The Zacks Rank was designed to identify stocks with potential over the next 1 to 3 months, so it's better suited for short-term traders.
• Wide range of tools and resources: In addition to its rankings, Zacks provides screens, charts, analysis reports, investing strategies, and other resources to research stocks.

Overview of Motley Fool

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:

• Qualitative stock picking: Motley Fool analyzes stocks using qualitative factors like management, competitive advantages, and growth opportunities. Picks are backed by analysts' reasoning.
• Long-term investing approach: Motley Fool's stock picks typically focus on high-growth companies with 5+ year investment timelines. This caters to long-term "buy and hold" investors.
• Entertainment focus: The Motley Fool brand uses humor and tries to make finance more fun through podcasts, videos, conferences, and stock advisories.
• Variety of stock newsletters: Motley Fool offers nearly a dozen stock advisories, each with a different focus like small-cap stocks, dividends, or global stocks.

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:

• Ranks are updated daily based on estimate changes so the rankings are very responsive to new analyst revisions.
• The Zacks Rank looks at estimate changes across brokerage analysts to identify positive or negative trends.
• It focuses heavily on earnings estimate revisions as its primary indicator for finding top stocks.

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.

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:

• Competitive advantage and moat
• Management track record
• Growth opportunities and trends
• Product/service pipelines
• Market valuation

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:

• Data-driven vs. qualitative: Zacks uses quantitative models while Motley Fool focuses on qualitative analysis.
• Short-term vs. long-term: Zacks Rank picks for 1-3 month gains whereas Motley Fool has a 5+ year buy and hold strategy.
• Brokerage consensus vs. analyst reasoning: Zacks uses whole-market analyst data while Motley Fool provides the logic behind picks.

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:

Zacks Investment Newsletters

Zacks has a suite of newsletters that provide stock picks based on different strategies:

• Zacks Premium: Get access to all Zacks content and screens. Covers different investing styles.
• Home Run Investor: Focuses on small and mid-cap growth stocks with momentum.
• Value Investor: Picks undervalued stocks using Zacks' valuation model.
• Income Plus: Highlights stocks and funds for income-oriented investors.
• Insider Trader: Homes in on stocks with significant insider buying.
• Short List: Provides weekly watchlist of market-beating stocks based on various screens.
• Top 10 Stocks: Zacks' 10 best stock ideas for each month.

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:

• Stock Advisor: Flagship service provides two stock picks per month. Over 600% returns since 2002. Costs $199/year.
• Rule Breakers: Focuses on disruptive, hyper-growth stocks with 5x return potential. Launched in 2004. $299/year.
• Evergreen: Buys "starter stocks" perfect for beginner investors. 10 starter stocks each year. $199/year.
• Hidden Gems: Small-cap stocks under $1 billion market cap. 20-40 picks per year. $299/year.
• Million Dollar Portfolio: David Gardner's personal picks and portfolio. $1,999/year.

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:

• Stock picking style: Zacks uses quantitative models while Motley Fool focuses more on qualitative analysis.
• Short-term vs. long-term: Zacks newsletters cater to short-term traders while Motley Fool is better for long-term investors.
• Stocks covered: Zacks looks at all types of public stocks whereas Motley Fool targets mainly growth stocks with some dividends.
• Cost: Motley Fool's newsletters have lower annual fees compared to Zacks in most cases.

So Zacks offers more tools for short-term trading across all stocks while Motley Fool provides long-term growth opportunities at a lower cost.

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:

• Earnings-driven approach: Zacks Rank is based on changes in brokerage analyst earnings estimates for each stock. Rising estimates signal upside potential.
• Short-term bias: The Zacks Rank looks for stocks primed to outperform over the next 1-3 months based on earnings estimate trends.
• Proprietary models: Zacks has proprietary quantitative models like the Zacks Rank and Zacks Style

Scores that power its stock analysis.

• Data from multiple sources: Zacks uses earnings data from brokerage analysts, valuations, insider trading activity, hedge fund signals, and other datasets.
• Frequent updates: The Zacks Rank and other ratings are updated daily as new data comes in, so the rankings are very responsive.

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:

• Qualitative factors: Motley Fool looks at competitive advantages, management quality, growth avenues, market cycles, and other qualitative factors.
• Long-term outlook: Their analysts focus on high-growth stocks that can be held for 5+ years based on the company strengths.
• Insight from analysts: Analysts provide the reasonings behind each stock pick in Motley Fool advisories to provide context.
• Team collaboration: Motley Fool has a community approach with analysts sharing ideas and “foolish insights.”
• Entertainment style: Motley Fool adds entertainment value through humorous articles, videos, podcasts, and other content.

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:

• Data vs. qualitative focus: Zacks methodology is driven by data and models while Motley Fool focuses on qualitative analysis.
• Short-term vs. long-term bias: Zacks targets stocks with upside potential over the next 1-3 months. Motley Fool picks stocks to hold for 5+ years.
• Serious vs. entertaining style: Zacks has a serious quantitative approach. Motley Fool blends humor and entertainment into its analysis.

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 Premium: Get access to all Zacks investment research, ratings, picks, strategies, and screens.
• Stock, ETF, and mutual fund screeners: Screen for stocks based on Zacks Rank, style scores, valuation, insider trading, hedge fund activity, and more.
• Portfolio tracker: Upload your portfolios to track performance and get alerts when changes are needed.
• Stock, ETF, and mutual fund reports: Get in-depth analysis reports on individual securities.
• Investing strategies: Access various investing strategies covering growth, value, income, momentum, etc.
• Charts and research: View interactive charts, financial data, earnings estimates, and research reports on stocks.

Zacks focuses heavily on screening tools and quantitative research capabilities. Everything is centralized under Zacks Premium.

Motley Fool Tools & Resources

Some tools provided beyond Motley Fool’s stock picks include:

• Stock research library: Get access to analyst reports, earnings call transcripts, historical data, and more to research stocks.
• Motley Fool podcasts: Listen to various stock and investing-focused podcasts with Motley Fool analysts.
• Investing starter guides: Free educational overviews on how to research stocks, build portfolios, trade options, maximize dividends and more.
• Community boards: Interact with other investors on discussion boards and ask Motley Fool analysts questions.
• Investing webinars: Attend free webinars with Motley Fool experts on different investing topics.
• Motley Fool live events: Motley Fool hosts conferences and events for investors to learn in-person.

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:

• Data-driven vs. qualitative focus: Zacks has screening/tracking tools while Motley Fool provides analyst insights.
• Serious vs. entertaining style: Zacks takes a quantitative approach. Motley Fool blends humor and multimedia content.
• Paid vs. free content: Most of Zacks’ tools require a paid membership. Motley Fool offers some free resources.

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:

• Zacks Premium: $399/year
• Zacks Top 10 Stocks: $299/year
• Home Run Investor: $249/year
• Value Investor: $299/year
• Income Plus: $249/year
• Insider Trader: $299/year
• Short List: $299/year

Motley Fool Pricing

And here are the annual costs for popular Motley Fool advisories:

• Stock Advisor: $199/year
• Rule Breakers: $299/year
• Evergreen: $199/year
• Hidden Gems: $299/year
• Motley Fool Options: $249/year
• Million Dollar Portfolio: $1,999/year

Comparing the Costs

A few observations when comparing the pricing:

• Motley Fool is cheaper for stock picks: Their main advisories range from $99-$299 per year compared to $249-$399 for Zacks' popular newsletters.
• Zacks Premium is expensive: Zacks Premium costs $399 per year for site-wide access. Motley Fool has no equivalent all-access package.
• Motley Fool has a premium service: The Motley Fool Million Dollar Portfolio costs a steep $1,999 per year compared to Zacks' maximum of $399 per year.

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 is ideal if you want quantitative analysis, short-term trading, screening tools, and data-focused research.
• Motley Fool is preferred for qualitative analysis, long-term investing, analyst insights, and entertainment-style content.

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.

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.