The Motley Fool’s Stock Advisor service and Morningstar Premium are two affordable and easy-to-use investing services. While both services cater to a similar audience of long-term investors, they differ in a few important ways.
Stock Advisor focuses primarily on identifying a small number of stocks with high growth potential. Morningstar Premium offers analyst ratings and research reports for a huge number of stocks, but many of the platform’s best features are built around mutual fund investing.
So, which of these premium investment services is right for you? In this article, we’ll take a closer look at how Morningstar and Motley Fool Stock Advisor stack up and what types of investing styles they’re suitable for.
About The Motley Fool Stock Advisor and Morningstar Premium
Morningstar was founded in 1984 and has become one of the most widely respected investment research firms, especially when it comes to mutual fund research. A significant portion of the company’s business centers around helping investors make better, more informed decisions about managing their portfolios. Morningstar also has an asset management arm with more than $260 billion under management.
The Motley Fool was founded in 1993 and launched the Stock Advisor service in 2002. Stock Advisor is selective in picking stocks – you only receive two stock recommendations each month – but the service has racked up some impressive calls throughout its history. For example, Stock Advisor saw the potential of companies like Costco, Amazon, and Gilead long before the rest of the market caught on.
Motley Fool vs. Morningstar Video Comparison
Motley Fool vs. Morningstar: Similarities
The main similarity between The Motley Fool and Morningstar Premium is that both services offer stock analysis. However, even that similarity only extends so far, because the way they go about analyzing stocks is very different.
Stock Advisor is a stock picking service that offers brief stock reports on a small number of stocks. Specifically, it only covers two stocks per month.
Morningstar is an investment research company that covers thousands of stocks. It’s analysis is broad and focuses on whether a stock is trading above or below analysts’ price targets. It also provides access to in-depth research reports written by Morningstar analysts.
Motley Fool vs. Morningstar: Differences
Assets Covered
The biggest difference between The Motley Fool’s Stock Advisor and Morningstar Premium is that they cover different assets. Stock Advisor is focused solely on stocks, and only high-growth stocks at that.
Morningstar has a much wider scope, with analysis covering stocks, bonds, exchange-traded funds (ETFs), and mutual funds. In fact, Morningstar is generally more concerned with mutual funds and ETFs than with stocks, and much more so than most comparable stock picking services. You’ll find that while Morningstar Premium includes stock rating lists, a lot of what you’re paying for with this platform are tools built around mutual fund discovery and analysis.
Pick Format
The way that Stock Advisor and Morningstar present stock picks is extremely different.
Stock Advisor is essentially a newsletter that arrives in your inbox once per month. The newsletter will contain a long research report that makes the case for why two companies, the newest stock recommendations, are poised for growth. In the newsletter, you’ll also get brief updates on all the other picks in the Stock Advisor portfolio and advice on removing old picks from the portfolio as needed. The service also keeps a ranked list of the top 10 stocks already in the portfolio that Motley Fool analysts believe are worth doubling up on.
Morningstar Premium doesn’t have an ongoing portfolio, but rather maintains lists of stocks that are valued below what the company’s analysts believe they’re worth. These lists are updated on a daily basis, and while they typically don’t turnover in less than a few weeks, there are many more stock picks at any given time than you’ll find in the Stock Advisor portfolio.
Importantly, Morningstar has multiple different lists of stocks worth your attention. These include 5-star-rated stocks, undervalued wide moat stocks, and more. This is good in that you can decide what types of stocks you want to invest in. On the other hand, since you’re dealing with hundreds of potential recommendations, you’re left to do your own research to figure out which stocks are the best bet.
Analysis and Discovery Tools
Simply put, Stock Advisor doesn’t have any stock analysis or discovery tools. You’re presented with two new companies each month and that’s about it. The service doesn’t include a stock screener, news, or any other tools you can use to find additional investments.
However, if you want to invest in between new recommendations, Stock Advisor does provide some assistance. The service ranks 10 stocks already in the portfolio that Stock Advisor analysts think are worth reinvesting in right now. It also keeps a list of foundational stocks, which Motley Fool analysts think every growth investor should own.
Morningstar may require more research, but it also puts the investment tools you need to do that research at your disposal. You can find detailed fundamental information and news about any of the individual stocks that show up in the recommendation lists. Better yet, most stocks are accompanied by a brief but detailed analyst report that explains the recommendation. You can also view the entire history of past analyst reports for that company. Morningstar also offers a fair value estimate to Premium subscribers, which can give you more information on the potential gains from an investment.
Historical Returns
Since Morningstar leaves investors to build their own portfolio, it’s not possible to calculate a historical performance. But, keep in mind that this firm has been around for more than 35 years and is a behemoth in the stock and fund analysis space. In fact, many financial advisors lean on Morningstar and many brokers offer Morningstar reports.
Stock Advisor has an extremely impressive historical performance. The service’s picks have returned over 400% over the past 20 years. That’s well above the 119% return of the S&P 500 over the same time period.
Pricing Comparison For Motley Fool vs Morningstar
The Motley Fool Stock Advisor costs $199 per year, but it’s easy to find a discount to bring the cost of a Stock Advisor subscription down to $99 for the first year. Morningstar Premium costs $34.95 per month or $249 per year, and discounts are available if you sign up for multiple years. In any case, neither of these services is particularly expensive. Morningstar Premium offers a 14-day free trial, whereas Stock Advisor does not offer a trial.
Resources Comparison
Stock Advisor has great stock picks, but it’s fairly light on additional resources. The only tools beyond the once-monthly newsletter are the ranking and foundational stocks lists, and there’s rarely commentary on the market beyond the current portfolio. It’s worth noting that The Motley Fool offers several complementary stock picking services if you want more stock recommendations. For example, Rule Breakers is a similar monthly newsletter that offers high-growth tech stock picks.
Morningstar Premium, on the other hand, is rich with resources. You not only get analyst reports for a huge number of stocks, but you also get a look at important metrics like fair value. Morningstar Premium subscribers also get access to a premium mutual fund screener and stock news articles that aren’t available to the public. The Portfolio X-ray tool is especially useful for evaluating your asset allocation across multiple mutual funds and ETFs. It’s worth noting that while Morningstar also offers a massive amount of fundamental data about US stocks, most of this is in the form of free content available without a subscription.
Which Service is Better?
Ultimately, whether The Motley Fool or Morningstar Premium is better comes down to what you’re looking for. They’re both excellent services that easily justify their prices. They also both work well for everyone from beginner investors to more advanced investors.
The Motley Fool is a better service for investors who want to be told which stocks to buy and when. Stock Advisor doesn’t require investors to do a lot of their own research and you only need to buy stocks once a month. The recommendations are easy to follow even if you don’t read the research reports in their entirety. Given this service’s track record, it’s a fair bet that you can blindly follow the recommendations and come out okay.
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Morningstar is better for investors who want lists of high-quality investment ideas and the tools to develop their own investment thesis. It gives you quality investment research into a much wider range of stocks than Stock Advisor, but you need to understand how to do your own fundamental analysis to decide what stocks are right for your portfolio. Overall, it’s much more self-directed than Stock Advisor and it requires you to commit some time to research.
Morningstar is also the better choice for investors who want to invest in ETFs and mutual funds alongside individual stocks. The firm’s mutual fund ratings are widely trusted, and Premium subscribers get access to really useful portfolio analysis tools that dig into the holdings inside your funds.
You can try Morningstar Premium free for 14 days using this link.
You can learn more about the services by checking out our Motley Fool review and our Morningstar review.
Alternatives to Motley Fool and Morningstar
Motley Fool and Morningstar are widely considered to be among the top investing services. For the price, they’re hard to beat.
That said, there are a few alternative services you might consider:
Zacks Premium ($249/year): In-depth research and ratings for thousands of stocks.
Seeking Alpha ($239.88/year): Exceptional stock screener, fundamental data, and analyst opinion columns.
Stock Rover ($79.99/year): Detailed fundamental research and valuation models.
Conclusion
Both the Motley Fool Stock Advisor and Morningstar Premium are excellent, affordable services that can help long-term investors beat the market. Stock Advisor is simple to follow and has a strong track record, but it can leave something to be desired for investors who are looking to build a diversified portfolio quickly. Morningstar Premium requires more self-directed analysis, but it offers a wealth of information and can help you supplement individual stock picks with mutual fund investments.
Motley Fool Benefits
Best for investing in individual stocks
A 20-year track record of beating the stock market
Stock picks are simple and easy to follow
Morningstar Benefits
Lists of highly rated undervalued and wide-moat stocks
Unrivaled tools for mutual fund analysis
Great research tools for self-directed investors
