I subscribed to Zack’s investment research after noticing that the company seemed to be actively following many of the stocks I was also following. I would frequently see the company’s articles on my brokerage’s website or app covering various stocks, including a basic analysis of where the stock might be headed. I assumed this was the kind of generic information that was available to the general public and that I may be able to get some more detailed information by joining as an official member, so this was my main motivation for trying the service to begin with.
There are three main tiers of service available from Zack’s and the details are as follows: Zack’s premium at $249 per year, Zack’s investor collection for $495 per year, and Zack’s ultimate at $2,995 per year. They also offer a course called “Zack’s method for trading” for $39 and another service called “Research Wizard” which offers a two-week free trial, but I did not find any pricing available on this level of service when initially signing up. The main level of service I had heard about and was interested in trying was Zack’s premium at $249 per year, so that is what I signed up for.
The first unfortunate note to make right off the bat is if you’re looking for a “risk-free” way to test out Zack’s premium, there really isn’t a way. A credit card is required to sign up for the free trial, and a simple google search will reveal numerous complaints about issues regarding being charged automatically despite requesting not to be billed, among others. My intention was to try the service beyond the trial period anyway, so it really wasn’t much of an issue for me, but it may be for some who are weary of being charged for a service when they aren’t completely convinced that it works.
The main benefit of the service is the “Zack’s Rank Lists,” which are lists of the best and worst stocks to invest in, according to Zack’s analysts. There is some value in these lists, but I personally didn’t find enough conviction in them to solely rely on their recommendations, so I ended up cross referencing between another service I used at the time. And in my view, that is the best way to use Zack’s information.
According to Zack’s, the company “processes information from roughly 3,000 analysts at over 150 different brokerage firms. At any given point in time, we’re monitoring well over 200,000 earnings estimates and other related data looking for change.” And the CEO of the company was quoted as saying “Earnings estimate revisions are the most powerful force impacting stock prices.” The company provides a more detailed explanation of how the ranking system works online and you can read more about it without being a member, but the general summary is that Zack’s monitors stocks and generates rankings based on the number of earnings estimates revisions received. So, for example, Zack’s says “if an analyst raised his earnings estimates last month, he’s more likely to do it again this month, and the other analysts are likely to do the same.” Zack’s then ranks the stocks on a scale of 1-5, with 1 being a strong buy, and 5 being a strong sell.
Some investors may agree with this notion, but I personally have very little faith in analysts and their forecasts/predictions. There are various websites available that show the success rates of analysts all over the world, and for the majority, the results are abysmal. I encourage you to do some exploring of your own, the results will likely shock you and also prove why most analysts’ recommendations should be taken with a grain of salt. So, rather than just taking the advice of once particular analyst, Zack’s takes the earnings estimates/revisions of thousands of analysts, and combines them into a ranking system. I don’t know if it’s any better to take a bucket of analysts who are likely to be wrong in their predictions over following just one, but that’s just me.
I followed the service very closely for about three months, and then continued to do so more anecdotally for the remainder of my subscription, and I did not renew after that. To be fair, I did discover a handful of opportunities from using the service, but again, that was with me using my own personal strategy of supplementing Zack’s with another service I use, along with my own due diligence. The main flaw with using Zack’s exclusively is definitely the ranking lists themselves, as the sheer number of stocks on the lists the company provides is far more than any individual investor could reasonably handle. And on top of that, the lists are constantly changing, so it is not uncommon to see a stock go from a “Buy” to a “Sell” rating in a very short period of time. As previously mentioned, Zack’s ranks stocks on a scale of 1-5, and the #1 rank list alone contains over 200 stocks! The premium service also offers a “Focus list” for long-term investors looking for ideas, but that list isn’t much better, in terms of narrowing down potential candidates, as that list contains 50 stocks. There are also no strict entry/exit guidelines provided with each trade, so if you are looking for a service with precise instructions, this isn’t it. Zack’s also claims that the company’s recommendations consistently beat the market (like most of them do!), but I could not find a full verifiable track record for the company’s recommendations, which is another concern. Although, based on my experience using the service, I cannot see how that would be possible for the average investor.
To conclude, Zack’s may be one of the most highly recognized financial publications out, but I can’t really figure out why. After seeing Zack’s articles for years and using the service for some time, I definitely consider Zack’s to be more along the lines of a “MarketWatch” service or similar; i.e., something you get for free, not something you pay for. The vast amount of information presented by Zack’s is simply too overwhelming to get any real use out of it, which may be one of the company’s selling points for trying the other services Zack’s offers or using them in addition to the premium service. With that said, I have not tried the more expensive subscription options, so I cannot speak to the value or lack thereof within those products, but based on what I saw during my time as a subscriber to Zack’s premium, I couldn’t justify spending any more money on the company’s offerings. If you are new to investing and looking for a general starting point to identify potential stocks worth investing in, this may be a good option for you. However, at $249 per year, I believe there are better options available at the same price point, or similar. And considering that you would likely still need to conduct your own due diligence or use another service alongside it, the additional time and/or resources required to get value out of the service make it difficult for me to recommend at this time.