One of the primary goals of any investor who buys stocks should be to beat the broader market's performance. But that's easier said than done, considering the S&P 500's historical annual return of nearly 10%.
Yet since their inceptions 2004, both the Motley Fool Rule Breakers and Motley Fool Inside Value newsletters have consistently beaten the market. In fact, the average Rule Breakers pick has returned 95% as of this writing, outpacing the market by nearly 40 percentage points in the process. And Inside Value members have enjoyed total returns of over 47% since its beginnings in 2004, crushing the market by more than 16 percentage points (returns as of 2/23/2017).
But Rule Breakers and Inside Value have accomplished this feat using two distinct investing methodologies. So what makes them different, and which stock newsletter is the best fit for you?
How Rule Breakers discovers the best high-growth stocks
Motley Fool co-founder David Gardner (pictured above, left) wears the hat of Chief Rule Breaker, where he leads his team of analysts for the newsletter of the same name.
More specifically, Rule Breakers seeks to find underappreciated growth stocks with strong management teams and sustainable business strategies. To consistently accomplish that goal, the Rule Breakers team looks for the following six attributes in a business:
- Innovative leaders that have moved early to capture emerging industries.
- Sustainable competitive advantages thanks to business momentum, intellectual property, visionary leaders, or a lack of viable competition.
- Perhaps counterintuitively, companies whose shares have a history of past price appreciation. These are winners that keep on winning, and with stock prices that tend to follow suit.
- Strong management teams and smart backing.
- Strong branding and consumer appeal.
- Again perhaps counterintuitively, Rule Breakers also loves stocks that are widely considered "grossly overvalued," which helps weed out the "obviously great" companies that are overvalued.
The Rule Breakers team also offers two new stock recommendations each month (or re-recommendations of existing picks), updates on any sell recommendations as needed, and its own monthly growth-centric "Best Buys Now" list of the top five timely investing opportunities taken from its pool of open recommendations. Rule Breakers also maintains its own list of "Starter Stocks," or essential companies that they believe can form the foundation of any strong, growth-centric portfolio.
How Inside Value discovers the "cheapest" stocks on the market
Meanwhile, longtime Motley Fool analyst Rich Greifner serves as lead advisor for Inside Value, supported by his team, including advisor Philip Durell, analyst Rana Pritanjali, and analyst John Rotonti. Rich, for his part, has worn many important hats at the Fool, lending his investing talents to other services including Stock Advisor, Rule Breakers, Hidden Gems, Rule Your Retirement, Champion Funds, Million Dollar Portfolio, Deep Value, and Motley Fool One.
Just as it sounds, Inside Value focuses specifically on the tenets of value investing -- that is, the process of identifying and buying stocks for less than their intrinsic value, as calculated by the team. More specifically, Inside Value primarily aims to find high-quality companies whose shares sell at a discount relative to their true value.
So what do these businesses look like to the Inside Value team? More often than not, they share the following four characteristics:
- Sustainable competitive advantages such as strong brands, cost advantages, and network effects.
- A sound financial profile, including diversified revenue streams, a strong balance sheet, and consistent free cash flow generation.
- A strong, shareholder-friendly management team.
- Stocks with an attractive margin of safety relative to the team's fair value estimate for the underlying business.
Interestingly enough -- and speaking to their effectiveness -- this list shares several items with the aforementioned investing methodology employed by the Rule Breakers team. And similar to Rule Breakers, Inside Value offers its own regularly updated list of "Best Buys Now," two new buy recommendations on a monthly basis, and any sell recommendations and other real-time coverage to keep subscribers informed with what's happening within their universe of stock picks.
You can start crushing the market today!
Whether you favor Motley Fool Rule Breakers hunger for growth or share Motley Fool Inside Value 's zeal for finding stocks selling for than they're worth, both services offer a compelling way for any investor to not only consistently beat the market over the long term but also to continuously grow your understanding of the investing world.
Best of all, you can sign up for either -- or both -- at a special introductory rate right now. Rather than paying the usual price, take advantage of this offer and click here to pay a significant discount to list price for Motley Fool Rule Breakers. Or you can click here to pay a significant discount to list price for Motley Fool Inside Value. Either way, it could mark the beginning of your journey to life-changing wealth.