Over the long term, the stock market returns around 10% on average. Investors looking to sit back and relax can put their stock investments on autopilot, investing in index funds, possibly managed by a robo-advisor or investment advisor. It’s easy, and it works.
But what if you’re not satisfied with average returns?
Investors seeking an edge over the market at large often look for individual stocks that will beat the market. And while some research these stocks themselves, using methods like the CAN SLIM strategy, others don’t mind leaning on equities experts to analyze stocks for them.
Enter: stock picking services.
What Is a Stock Picking Service?
Stock picking services do exactly what they sound like — they pick specific stocks they believe will outperform the broader stock market. They recommend those stocks to you, for you to act on or ignore as you see fit.
They sound straightforward, and they are, but many new investors confuse them with similar-sounding services.
For example, stock screeners are tools that help you filter down the thousands of available stocks to a manageable few, based on your precise criteria.
Stock scanners, while related, are another type of online investing tool that stream stock-related data and alerts in real time.
And, of course, stockbrokers offer the actual mechanism for buying and selling stocks online.
Keep in mind these services often overlap. Most stockbrokers offer stock screener tools. Some stock screeners offer real-time stock scanning.
What to Look for in a Stock Picking Service
As with everything else in life, some stock picking services are better than others.
But stock pickers don’t simply vary based on quality. They also vary in focus.
Many specialize in serving day traders or swing traders, helping them identify stocks poised to jump or drop sharply that day or during the following week. Others serve long-term buy-and-hold investors, recommending stocks they believe will grow quickly in the years to come.
First and foremost, look for stock pickers with a strong track record of beating the market. No stock picker will get every call right, but the astute ones prove to be right far more often than wrong.
Before taking investment advice from any stock picker, verify their bona fides in the form of a track record. Compare their picks’ returns to the market at large whenever possible. It doesn’t matter if their picks saw 30% growth last year if the market grew by 35%.
The longer that track record, the better. Look for experience in your stock pickers, as a year or two of good picks could come down to luck. Twenty years of strong picks indicate skill.
Take a close look at stock pickers’ integrity as well. Ethical and transparent stock pickers never mislead their audience by recording trade wins but leaving losing trades open, for example, and only reporting the closed wins.
Likewise, they never record profits before having them executed and in hand. They don’t claim wins for hypothetical historical profits they didn’t actually earn, saying “Our system would have earned a 1,000% profit over the last 10 years!”
Look for credibility and transparency indicators like free trial periods and money-back guarantees. It always helps to try a service before committing your money permanently.
Finally, make sure you understand their stock picking strategy. Reputable stock pickers explain their approach and the data analysis they use, so do your homework to understand the stock picker’s methodology and ensure it aligns with your personal investing goals.
Best Stock Picking Services
Regardless of your investment strategy, there’s a stock picking service designed for you.
Here are the best currently available to help you beat the market.
1. The Motley Fool Stock Advisor
Designed For: Buy-and-hold investors
The Motley Fool has been around for roughly three decades and has earned its place at the head of the table among long-term stock pickers.
The Motley Fool showcases that their Stock Advisor picks have delivered nearly five times the returns of the S&P 500 since their inception, as of October 2021. That’s a cumulative return of 683% compared to the S&P’s 143%, which makes for a pretty impressive visual:
Further reinforcing the integrity of their approach, they urge you to commit to three investing principles when you enroll:
- Own at least 15 stocks.
- Hold your stocks for at least five years.
- Expect market downturns every five years.
The Motley Fool was founded in 1993 by two brothers, David and Tom Gardner. In the decades since, the two brothers have written four bestselling books, partnered with NPR for investing radio segments, and launched a series of wildly popular podcasts.
With more than 700,000 subscribers, their Stock Advisor service has performed spectacularly by any standard.
The service includes four newsletters every month, starting on the first Thursday of the month and then arriving weekly.
The first and third newsletters contain a new stock recommendation, and the second and fourth Thursday’s newsletters contain five New Best Buys Now stock picks. The latter comprise previous picks that they still recommend as strong buys.
When market conditions change, subscribers receive “sell” recommendation emails in real time. Subscribers also get access to Fool’s “Top 10 Best Stock to Buy RIGHT Now” report and their “Top 5 Starter Stocks” that they recommend for all new investors.
The Stock Advisor subscription costs $199 per year, with a discounted $79 offer for the first year (new members only). With its 30-day money-back guarantee, you can try a full monthly cycle before deciding whether to continue.
For more information, see our full review of The Motley Fool and its services.
2. The Motley Fool Rule Breakers
Designed For: Buy-and-hold investors
The Motley Fool offers more than its flagship Stock Advisor subscription. The Rule Breakers newsletter features “hidden gem” growth stock picks, and particularly companies that are poised to disrupt their industries.
Since its inception in 2004, the Rule Breakers stock picks have returned 371%, according to The Motley Fool. That’s in contrast to the S&P 500’s 123% over the same period.
If that sounds weaker than Stock Advisor’s pick returns, bear in mind that Stock Advisor launched several years earlier.
The Rule Breakers stock picks tend to be up-and-comers, rather than established mega-corporations. That adds an element of risk, so consider Rule Breakers only if you’re looking for scrappy growth stocks that the wider market hasn’t discovered yet.
Like Stock Advisor, subscribers receive stock recommendations on the first and third Thursdays of the month, and five New Best Buys Now on the second and fourth Thursdays. You also get sell notifications in real time and access to The Motley Fool’s Starter Stocks.
At $299 per year, Rule Breakers costs a bit more than Stock Advisor, and you get the same 30-day guarantee.
3. Seeking Alpha Premium
Sign up and you’ll receive a 14 day free trial.
Designed For: Buy-and-hold investors, day traders
Seeking Alpha Premium is a powerful package of market intelligence tools designed to help you become the best investor or trader — or both — you can possibly be.
For $19.99 per month — an annual savings of $120 — Seeking Alpha Premium delivers:
- Unlimited access to premium content created and curated by Seeking Alpha’s deep stable of expert contributors
- Seeking Alpha Author Ratings and Author Performance metrics
- Proprietary quant ratings available nowhere else
- Unlimited earnings call audio and transcripts
- Powerful stock screeners
- Article sidebars with key data, charts, and ratings
- Tracking for each investment idea’s performance
- And much more
4. Trade Ideas
Designed For: Day traders
The software platform Trade Ideas uses an artificial intelligence named “Holly” to generate real-time trade recommendations for subscribers. Made up of more than 70 proprietary algorithms, Holly runs more than 1 million simulated trades each night before the trading day starts.
She then proposes stock trade picks in real time, along with recommended entry and exit points. That delivers a complete day trading plan for each pick.
Trade Ideas also features its own internal broker, so you can authorize Holly to execute trades on your behalf rather than buying or selling manually through your own separate brokerage account.
One particularly nice feature that Trade Ideas includes is their simulated trading option. It lets you trade with fake money and build your comfort level before you start slinging your hard-earned cash around the market.
Trade Ideas’ many features come with a hefty price tag. Plans start at $1,068 per year, and if you want the full Holly AI experience, you need to upgrade to their Premium plan at $2,268.
But for that price, you get access to arguably the best day trading software in the business.
5. Mindful Trader
Designed For: Swing traders
The beauty of Mindful Trader is that you don’t need to constantly stay on standby waiting for trade alerts.
The recommended swing trades take up to 10 days between buying and selling, so you can buy at any time during the trading day. That’s a crucial perk given that most of us can’t glue our eyeballs to the screen all day waiting for alerts to pop up.
Eric Ferguson, the founder of Mindful Trader, put decades of stock market data through statistical analysis to create an algorithm that alerts him — and you — to high-probability market movements. He includes stock trades, futures trades, and options trades. In 2021 he also added a stock equivalent to his futures trades, so you can mimic them even if you don’t want to hassle with trading futures.
Eric updates his website for logged-in subscribers when he executes a trade, so you can do the same in your own brokerage account. He makes the overwhelming majority of his trades within the first half hour of the markets opening every day, so you can simply check the site once per day. As swing trades, these aren’t nearly as time-sensitive as faster day trades.
I also like the backtest review of Mindful Trader’s hypothetical returns. Over the last 20 years, Eric’s trading system would have yielded an average annual return of 143%. You can view the year-by-year return breakdown here.
I’ve personally been following Eric’s trades for around nine months now. During that time, I’ve earned an annualized return of 31.2%.
That doesn’t mean you don’t get hit with losses some months. All traders know the stomach-dropping feeling of a string of losing trades. In Eric’s backtests, the median account drawdown was 28%.
That’s nothing to take lightly. I can personally attest to how jarring it is to go from thousands of dollars up for the month to thousands of dollars down, all within a window of just a few days.
Mindful Trader charges a monthly subscription fee of $47. Although not cheap per se, it’s less expensive than many competitors. And the monthly billing interval means you can try it for a month or two and then cancel without losing a fortune if you don’t like the trading style.
6. Pilot Trading
Designed For: Traders of cryptocurrencies, futures, forex, and ordinary stocks
Pilot Trading features psychology-based AI algorithms that anticipate when asset prices will shift directions, beyond simply showcasing their current trends. To make trading even faster and easier, they connect directly to many brokerage accounts for in-app trading.
One feature that sets Pilot Trading apart is the breadth of assets it covers. Beyond stocks, they also include futures, forex, and cryptocurrency trends and anticipated swing points. And if you’re new to trading any of those assets, Pilot Trading offers a simulated paper trading account to practice.
Best of all, Pilot Trading foregoes the massive membership fees charged by many competitors. They charge a flat $19.95 per month, with access to all features. No upselling, no separate pricing for bells and whistles, just one affordable price for all users.
7. Warrior Trading
Designed For: Day traders
Warrior Trading excels at education, and that starts at the top with its founder Ross Cameron.
Cameron leads highly personal chat room discussions, audio feeds, and video feeds in real time. Subscribers can even see Cameron’s own trades in real time, along with the company’s other professional traders and educators.
To help new traders get started, Warrior Trading provides a series of free educational videos in addition to their premium education tools.
In a fun exercise, Cameron opened a publicly visible new account with only $500, and he lets subscribers watch as he grows it to a target of $1 million. In the first month alone, he grew it from $500 to more than $53,000.
Warrior Trading delivers a newsletter every day with a handful of stocks to watch that day. You can use their real-time scanner to track them and other stocks throughout the trading day and create SMS message alerts in addition to email alerts for timely trades. To build confidence, you can trade with fake money using their simulator.
All that personal attention costs a pretty penny. Warrior Trading’s Pro service charges a dizzying $5,997 per year, so it doesn’t exactly appeal to the mildly curious. Alternatively, you can try their Warrior Starter Course, but it’s not cheap either at $997 for the first month then an auto-renewed $197 per month thereafter. I also dislike that they don’t list the price on the sales page. But they have a strong reputation for results.
8. Investors Underground
Designed For: Day traders
Another education-centric platform, Investors Underground provides more than 700 video lessons and guides. It hosts frequent webinars with plenty of question-and-answer sessions.
Investors Underground sends a daily newsletter with stock watchlists and game plans, so you come to the market prepared. When the bell rings to kick off the trading day, you can join other traders in the chatroom to compare notes, ask questions, and monitor real-time stock scanning and alerts.
Those stock alerts don’t include an SMS option however, a feature many day traders prefer to more passive email alerts.
Although far from cheap, Investors Underground memberships still clock in at under one-third of Warrior Trading’s fee. The service costs $1,897 per year, and you can optionally add access to its premium courses if you want to up your trading game. If you want to try it for a month, you can pay monthly at $297 per month.
According to Investors Underground, their customers remain happy to keep paying. They claim 91% of their subscribers report the membership to be a good value, and that 83% say their trading improved after they joined.