Action Alerts PLUS Review – Should You Use This Stock Picking Service?

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By Theo Madsen

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Action Alerts PLUS Review

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Action Alerts PLUS Review

  • Ease of Use
  • Quality
  • Performance
  • Value
3.8

Summary

Action Alerts PLUS is a stock picking service from The Street. This service aims to help traders build a diversified, long-term investing portfolio with a focus on reducing risk while locking in profits. Action Alerts PLUS includes the ability to actively trade around positions in the portfolio as well as stock market analysis tools and more. Learn everything you need to know about this stock picking service by reading our complete Action Alerts PLUS review.

Pros

  • Long-term portfolio with active trading around positions
  • Real-time alerts for trades
  • Holds cash to deploy during market downturns
  • In-depth market analysis posts every week

Cons

  • Has historically underperformed the S&P 500
  • Active trading can add to investors’ tax bills

About Action Alerts PLUS

Action Alerts PLUS is a stock picking service from The Street and is the former home of Jim Cramer’s portfolio. Jim Cramer – the host of CNBC’s Mad Money – is no longer affiliated with The Street or Action Alerts PLUS, but the portfolio still reflects Cramer’s style. Action Alerts PLUS focuses on long-term stock recommendations while actively trading to lock in profits and reduce risk.

So, is this investment subscription service right for you? Our Action Alerts PLUS review will cover everything you need to know.

Action Alerts PLUS Pricing Options

Action Alerts PLUS offers a single subscription tier with discounts for extended subscriptions. A monthly subscription costs $29.99 per month, an annual subscription costs $16.67 per month, and a two-year subscription costs $12.50 per month.

Action Alerts PLUS Pricing

You can try out Action Alerts PLUS free for 14 days (credit card required).

Action Alerts PLUS Investment Style

Action Alerts PLUS seeks to build a diversified, long-term investing portfolio that can beat the broader stock market. The portfolio invests in stocks from all major market sectors and in income stocks, value stocks, and growth stocks.

While the portfolio typically invests in stocks with a horizon of several years, Action Alerts PLUS trades several times a week to add to or subtract from existing positions. The service prefers to realize profits over trying to minimize capital gains taxes. 

Action Alerts PLUS Portfolio

The investment portfolio typically holds around 20-40 positions, with few stock picks making up more than 5% of the total. Action Alerts PLUS also keeps around 5% of the portfolio in cash so that investors are ready to jump in during a market downturn. In the midst of the 2022 downturn, the portfolio has accumulated a 25% cash position.

Within the overall investment portfolio, Action Alerts PLUS has a selection of around 10 “core holdings.” These are stocks that have a high return on equity, excellent leadership teams, and a strong business moat. Action Alerts PLUS recommends holding these stocks for the long term.

Action Alerts PLUS Core Holdings

Stock Trading on Action Alerts PLUS

One of the key features that differentiates Action Alerts PLUS from other stock picking services, and particularly the Motley Fool Stock Advisor, is that it actively trades around the positions in the portfolio.

Each position in the portfolio is given a rating from 1-4:

  • 1 indicates that a stock should be bought now
  • 2 indicates that a stock should be bought on a pullback
  • 3 indicates that a stock should be sold on strength
  • 4 indicates that a stock should be sold as soon as possible

Action Alerts PLUS places several trades during the average week, typically scaling into and out of positions to move money from weaker stocks to stronger stocks. Trades are accompanied by real-time alerts and an explanation of why the recommended trades are being made. These alerts are very easy to understand and follow along with.

Action Alerts PLUS Alerts

Action Alerts PLUS Stock Market Analysis

Action Alerts PLUS offers two types of analysis posts.

The first are posts that take a deeper look at individual stocks in the portfolio or that the Action Alerts PLUS team is watching. These analysis articles are mainly focused on technical analysis and discuss potential buy and sell points for stocks in the portfolio. Some articles also dive into the market factors or news that may be driving a stock’s price. 

Action Alerts PLUS Analysis

The second type of analysis that Action Alerts PLUS offers is a weekly roundup that discusses the overall stock market and the performance of the platform’s portfolio. These weekly roundups offer very in-depth analysis and cover economic readings, investor sentiment, sector-specific analysis, and a discussion of how the Action Alerts PLUS team will be approaching trading over the coming week. The roundups are a little bit technical, but they’re written to be accessible enough for most investors to get something out of them.

Past Performance

Action Alerts PLUS has underperformed the S&P 500 since the service launched in 2001. Over the past two decades, Action Alerts PLUS returned 255.5% compared to 451.4% for the S&P 500.

However, this track record largely reflects the performance of Jim Cramer’s Action Alerts PLUS, and Cramer left the service in mid-2019. In 2020, Action Alerts PLUS returned 25.0% compared to 18.1% for the S&P 500. In 2021, it returned 27.6% compared to 28.6% for the S&P 500.

Action Alerts PLUS Performance

Action Alerts PLUS has not been immune to the market downturn in 2022, losing 18.9% as of mid-July. By comparison, the S&P 500 has lost 17.9%.

Action Alerts PLUS Platform Differentiators

Action Alerts PLUS is one of many stock picking services focused on helping investors find long-term winning stocks. What makes it different from services like the Motley Fool Stock Advisor is that Action Alerts PLUS actively trades to buy and sell stocks within the portfolio. This may appeal to investors who want to take a more active approach to the market than services like Stock Advisor encourage.

Still, Action Alerts PLUS isn’t a short-term trading service like GorillaTrades or IBD Swing Trader. The investment portfolio is built on a foundation of long-term holdings, and most positions remain in the portfolio in varying amounts for several years before being fully sold off. 

What Type of Investor is Action Alerts PLUS Best For?

Action Alerts PLUS is best suited for active investors who want to trade within the bounds of a diversified, financially sound portfolio. It provides actionable real-time trade alerts and useful market analysis, while simultaneously highlighting strong long-term stock investments.

Unfortunately, Action Alerts PLUS’s investment advice doesn’t have a strong track record of success. While it has intermittently beaten the S&P 500, the service has dramatically underperformed the market since its inception in 2001. Since Jim Cramer left the service in 2019, Action Alerts PLUS has not demonstrated that it can consistently beat the market.

So, investors should be cautious when using Action Alerts PLUS. Those who are comfortable analyzing the platform’s trades to pick and choose which trades to follow may find the best results.

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Theo Madsen

Theo has been actively trading the forex markets since 2013. Over the past five years, he has gained experience trading currencies, stocks, options, and futures. Theo's trading experience led him to test out over one hundred different trading services and he shares his insights in reviews to help other traders.

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