Motley Fool Stock Advisor Review – Is This Stock Service Right For You?

The Motley Fool is one of the most widely used and highly respected stock picking platforms. Stock Advisor is the company’s flagship stock recommendation service. It’s been recommending stocks twice per month since 2002.

Over the past two decades, Stock Advisor has dramatically outperformed the S&P 500. That’s in part thanks to early investments in explosive growth stocks like Amazon, Netflix, and Tesla.

In our Stock Advisor review, we’ll explain what this service is all about and help you decide if it’s right for you.

Motley Fool Stock Advisor Pricing Options

Stock Advisor costs $199 per year, although there are new member promotions that bring the first year’s cost to under $100. There’s also a 30-day membership fee-back guarantee, so you can try out the service before fully committing.

If you want to get even more stock picks each month, you can also purchase Motley Fool’s Epic Bundle. This costs $499 per year and includes four services: Stock Advisor, Rule Breakers, Everlasting Stocks, and Real Estate Winners.

Motley Fool Stock Advisor Investing Style

Stock Advisor is the flagship stock picking service from The Motley Fool, the investment platform created by brothers Tom and David Gardner in 1993. Stock Advisor launched in 2002 and has been delivering two stock picks per month ever since.

Stock Advisor’s focus is on long-term explosive growth stocks. Some of the service’s most successful picks include Amazon in 2002, Netflix in 2004, and Telsa in 2012. Stock Advisor generally isn’t worried about finding undervalued growth stocks. The service’s analysts are willing to pay a significant premium for companies they think could disrupt an entire industry.

Stock Advisor recommends that investors plan to hold each of the recommended stocks for at least five years and often longer. Amazon stock has been in the portfolio continuously for more than 20 years.

This service isn’t specifically focused on tech stocks, but the growth-centric approach means that the Stock Advisor portfolio is generally tech-heavy. Even companies involved in sectors like insurance or healthcare typically have an innovative tech twist to them.

The vast majority of recommendations are for large-cap stocks, although Stock Advisor occasionally recommends mid-cap stocks as well.

Stock Pick Format

Stock Advisor issues two new stock picks every month. Stock picks come from The Motley Fool’s team of expert analysts.

Each new recommendation comes with a summary of what the company does and why the Stock Advisor team picked it. The analysis is pretty big-picture, focusing on broad opportunities within an industry and why Motley Fool analysts like the recommended company better than competitors. These summaries are beginner-friendly and they don’t dive into any detailed fundamental analysis.

Recommendations don’t have a target price or a stop loss. Since these are long-term growth investments, Stock Advisor simply recommends that you buy the stock around the time of the recommendation. If the stock drops, Stock Advisor doesn’t sell and, in fact, often recommends buying more shares. Really poor performing stocks will be moved to a “hold” category and members will receive a notification if the Stock Advisor team recommends selling a position.

Notably, stocks are frequently re-recommended within Stock Advisor. Re-recommendations signal that the Stock Advisor team thinks very highly of a company and sees an opportunity to double down. This is a way for investors to ride their winners and a big part of how Stock Advisor has beaten the S&P 500 over the past two decades.

Motley Fool Stock Advisor Additional Features

There are two lists within Stock Advisor that are worth paying as much attention to as you do to the new recommendations. The first is the ranking list, which shows the top 10 portfolio stocks to buy right now. It’s great if you’re looking for something to invest in between new recommendations.

The second list is the foundational stocks list, which includes 10 stocks that the Stock Advisor team thinks should be in every growth investor’s portfolio. This is terrific if you’re new to investing and want to get your portfolio off the ground quickly.

Stock Advisor also provides frequent updates about how stocks in the portfolio are doing. These aren’t groundbreaking analysis reports, but they’re useful if you want to learn more about the stocks you own. It’s also helpful to keep tabs on how the Stock Advisor team feels about a stock. When a stock is losing ground, it’s nice to be reassured that the analysts are still bullish about it.

Motley Fool Stock Advisor Performance

At the end of the day, what matters most about a stock picking service is whether it can consistently beat the market. Stock Advisor has shown that it can.

As of February 2023, Stock Advisor has returned 413% compared to 120% for the S&P 500 since 2002. That’s an enormous edge to maintain over 21 years.

To be fair, a lot of the portfolio’s performance is thanks to a handful of outstanding picks. For example, Stock Advisor’s 2004 Netflix recommendation is up nearly 20,000% as of 2023. Its 2002 Amazon recommendation is up 13,000%.

There are many picks from the last few years that have done quite well if you don’t measure against these once-in-a-lifetime wins. For example, Okta, a 2018 pick, is up 160% as of February 2023. Shopify, recommended twice in 2018 and again in 2020, is up 290%.

Of course, Stock Advisor isn’t immune to market downturns, and many 2021-2022 recommendations have been hit hard by the tech crash. 2021 picks like Skillz, Upstart, and Lemonade are each down more than 80% as of early 2023.

The Motley Fool Stock Advisor has a tendency to ride stocks all the way down if the service’s analysts believe the market is wrong about them. They’ve been proven right in the long run plenty of times, but keep in mind you could see a significant drawdown in the short term.

What Type of Investor is the Motley Fool Stock Advisor Best For?

Stock Advisor’s performance has been so outstanding over the past 21 years that it’s hard to find a compelling reason not to trust this service. Although it’s been death-gripping stocks that have been hit hard during the recent tech downturn, it’s also likely that these stocks represent terrific growth buys at current prices. Meanwhile, the service’s longer-term picks may have given up some gains, but they’re still significantly outperforming the S&P 500.

So, Stock Advisor is suitable for almost any investor who wants to build a long-term growth portfolio. You can pick and choose which recommendations to buy or simply buy them all depending on how much of your own research you want to do. You can use the foundational stocks list to jumpstart a new portfolio or the top 10 list to find stocks to buy whenever you have some cash to invest.

Stock Advisor is less suitable for value investors. Since the focus is on growth, Stock Advisor analysts are willing to pay a premium for companies that they think could be worth a lot more in the future.

It’s also worth considering the size of your portfolio. At $199 per year, Stock Advisor is fairly affordable. But you’ll want to have at least $5,000 in your portfolio to be confident you can make enough profit using Stock Advisor to pay for the cost of the service.