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Is Investor’s Business Daily Leaderboard a good stock-picking service?
How do you actually use IBD Leaderboard?
Also, how about its past performance records?
Lastly, can you actually make money with IBD Leaderboard?
After trying out IBD Leaderboard, I would like to share with you everything that I’ve found out and help you make a more informed decision.
How IBD Leaderboard Works
So, how does Investor’s Business Daily Leaderboard work?
When you subscribe to IBD Leaderboard, you would get access to a hand-selected portfolio of top growth stocks by IBD’s Leaderboard team.
They also call it the Leaders List.
The Leaders List is divided into two sections:
- Leaders Near A Buy Point
The “Leaders Near A Buy Point” shows you a list of stocks that are within their recommended buy price range, while “Leaders” show you a list of stocks that are extended in price.
For the stocks that are extended in price, it means that it’s probably wise to wait for the stock price to retrace before getting in.
Now, let’s take a closer look at the “Leaders Near A Buy Point” list.
Below is a screenshot of one of the stocks near a buy point.
When you click on the stock, you will see its “Buy Point”, “Position Size” and “Buy Range”.
The size of a full position on Leaderboard is 10% of your entire portfolio.
That means a half position is 5%, while a quarter position is 2.5%.
Ten full positions at 10% each would mean we’re fully invested.
When you click on “Analysis”, it will give you a brief technical as well as fundamental explanation for the buy recommendation.
When you click on “Charts”, it will show you “Daily”, “Weekly”, “Monthly” and “Intraday” with the stock’s market & industry performance and fundamental performance on the left side.
Below is the Daily Chart.
As you can see that, it shows you all the entry points on its weekly chart.
Apart from the “Leaders” list, there is also a “Leaders Watchlist”.
The Leaderboard team continually the market for the best prospects to add to the Leaders List.
The stocks on the watchlist are those fundamentally superior stocks that could become buys if they show a robust breakout from a proper base.
IBD’s Leaderboard Stock-Picking Strategy
So, how exactly Investor’s Business Daily Leaderboard team pick stocks for the “Leaders” List?
First of all, they would identify the strongest stocks poised for big gains using the CAN SLIM strategy as well as advanced algorithms.
CAN SLIM is an investment strategy that investors use to identify stocks that are poised to grow faster than average. Each letter in the acronym stands for a key attribute.
- C: Current quarterly earnings per share growth of at least over 20% from the same quarter in the prior year with
- A: Annual EPS growth of at least 20% over the last three to five years
- N: New products, management, or positive new events
- S: Scarce supply (e.g. share buyback and insider buying)
- L: Laggard stocks are preferred within the same industry (An RSI reading below 30 suggests that the stock is oversold while a reading of above 70 suggests that a stock could be overbought)
- I: Pick stocks that have institutional sponsorship by a few institutions with recent above-average performance
- M – Determine general market direction (CANSLIM stocks perform well in bull markets)
Then, they would hand-pick the best 10 to 15 stocks for the “LEADERS” list for position trading with a specific buy price range.
Okay, what is position trading?
Position trading is basically trend trading.
That means you find a stock that is about to go on an uptrend in the medium term, and get in at the start of the trend and get out when the trend peaks.
Generally, you hold your stocks for at least days or even weeks or months, depending on how long the trend lasts.
Now, how do they identify the trend and decide what is the proper buy point?
The answer is to use technical analysis.
Let’s look at one example.
As you can see from the annotation on the weekly chart of a “LEADER” stock, they identify possible bullish breakout patterns using support & resistance levels and also indicators such as moving averages.
Generally, they divide the “trend” into 3 stages.
The first stage usually has the least risk because the trend has the highest probability of success at this point in time.
The “Buy” signal is triggered when the stock is coming out of a base formation and moves above the 10-week moving average.
Normally, the profit target is 20% from its entry price point.
From the chart below, you can see the multiple entry points each time after it breaks out of its base.
So, when do you sell?
For every entry, there is a fixed profit target of 20%.
As you can see that, the position is usually trimmed to take profit when the profit target is reached.
Then, you add to your position when a proper buy point appears again.
What if the trade did not work out as planned?
A “Sell” signal is triggered either by “7%” fall from its previous entry point or dip below its 50-day moving average.
As you can see from the chart below, the stock ABNB tanked more than 7% from the $211.44 entry price and thus triggered the 7% sell rule.
IBD Leaderboard has a mobile app.
It provides real-time push notifications whenever a new position is added, increased, reduced or removed.
IBD Leaderboard Past Performance
When you want to find out if a stock picking service or trading alert service is good or not good, one of the first things you should look at is its past performance.
Has IBD Leaderboard been outperforming the market consistently over the past years?
If not, it is really not worth paying so much to get it because you would be much better off investing your money in market index ETFs such as S&P 500.
So far, I could find the performance comparison for the year 2020 only, as shown below.
As you probably know, the stock market in 2020 is very bullish after a sharp yet short correction in late Feb 2020.
IBD Leaderboard’s strategy works best in a bullish market (i.e. in a strong uptrend).
But, the problem is that the market is not going to be bullish all the time.
When the market is going sideways or bearish, then you would be seeing very different results.
So, I would like to see its performance over the past five years or even 10 years because it’s very easy to make money in the stock market when almost everything is going up.
IBD Leaderboard Pricing
So, how much does IBD Leaderboard cost?
There are currently three different pricing plans:
- Trial for 3 weeks at $9.95
- Monthly at $69/month
- Yearly Plan at $699/year
Personally, I feel it’s a bit expensive compared to other stock-picking services out there.
For example, Motley Fool Stock Advisor is priced at $199 per year.
Right now, there is a limited-time offer to try Motley Fool Stock Advisor for just $89/year (new members only), which is 60% off the usual price.
So, one month’s subscription to IBD Leaderboard could almost get you one full year’s subscription to Motley Fool Stock Advisor.
IBD Leaderboard Vs Seeking Alpha Premium
The key difference between Seeking Alpha Premium and IBD Leaderboard is that Seeking Alpha offers you Strong Buy Quant Ratings.
Seeking Alpha’s Quant Rating is derived after taking into account the following five “Factor Grades”:
- EPS Revisions
The Factor Grade is determined by comparing the relevant metrics for the factor for the stock to those for the other stocks in the same sector.
For example, to determine the grade for the “Growth” factor, metrics such as past sales growth, projected earnings growth, and stock price performance for the stock will be compared to the same metrics for the other stocks in the same sector.
Then, each factor is assigned a grade, from A+ to F.
Grade A+ means that the stock has the highest growth potential compared to its peers in the same sector.
On the other hand, a grade of F means that the stock has the lowest growth potential compared to its peers in the same sector.
In total, Seeking Alpha’s Quant rating is derived by comparing over 100 metrics for the stock to the same metrics for the other stocks in its sector.
There are five types of Quant ratings:
- Strong Sell (i.e. a score of 1)
- Sell (i.e. a score of 2)
- Hold (i.e. a score of 3)
- Buy (i.e. a score of 4)
- Strong Buy (i.e. a score of 5)
So, how have Seeking Alpha’s Strong Buy Quant Ratings performed, compared with S&P 500?
Do take note that the performance is based on backtesting.
From 2010 to 2022, Seeking Alpha Strong Buy achieved a total return of $174,156 based on $10,000 in investment capital while S&P 500 achieved a total return of $40,721.
Apart from Seeking Alpha Quant Ratings, you also get tons of useful financial and fundamental information (i.e. Earnings, Valuation, Growth, Profitability, Peers, Dividend, etc) and news and analysis on the stocks that you are researching or stocks that you own in your portfolio all in one place.
Now, how much does Seeking Alpha Premium cost?
- Basic: Free
- Seeking Alpha Premium: $239/year
- Seeking Alpha Pro: $2,400 per year (mostly for hedge fund managers)
So, is it worth paying for Seeking Alpha Premium?
$239/year works out to be about $19.90/month (i.e. $0.66/day).
A cup of Starbucks coffee costs about $2.75.
Personally, I have been using Seeking Alpha Premium for my own stock research and analysis.
[Limited Time Only] Try Seeking Alpha Premium For 14 Days Free
IBD Leaderboard Vs Motley Fool
Now, let’s compare IBD Leaderboard with Motley Fool.
Motley Fool Stock Advisor is a stock-picking service that is focused on helping you find high-quality companies with long-term growth potential for long-term investment.
On the other hand, IBD Leaderboard is more of a stock trading alert service that helps you trend trade high-growth stocks.
In terms of performance track record, Motley Fool Stock Advisor has a proven track record of beating the market consistently.
Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and 9th March 2023.
As of 9th March 2023, average Motley Fool Stock Advisor recommendations have returned over 386% since inception while S&P 500 has returned 115%.
In short, the Motley Fool Stock Advisor has outperformed the market 3 to 1.
That’s a HUGE difference in returns.
But, what about its individual stock picks?
This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.
Below is a table that shows you the performance of individual stock picks over the years.
As of 7th Dec 2022, Motley Fool Stock Advisor has had 164 stock recommendations with 100%+returns.
Here are just some of their best-performing stock picks:
- Amazon: it’s up 19,806%*
- Netflix: it’s up 23,901%*
- Walt Disney: it’s up 632%*
- NVIDIA: it’s up 16,423%*
- Shopify: it is up 4,107%*
- United Health Group: it is up 2,338 %*
[*Returns as of 31st Dec 2021. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
On the other hand, I could only find the performance of the IBD Leaderboard for the year 2020.
So, I would have more confidence to recommend Motley Fool Stock Advisor over IBD Leaderboard.
In terms of pricing, Motley Fool Stock Advisor is also much more affordable than IBD Leaderboard.
Usually, its annual subscription is $199.
Right now, there’s a special limited-time $89 offer* for new members for the first year when you click the link here to try it out for 30 days with a Membership-Fee-Back Guarantee. (*Billed annually. Introductory price for the first year for new members only. First-year bills at $89 and renews at $199)
So, for $89 a year- that’s just $1.70 a week – you can gain unlimited access to their library of expert stock recommendations which are carefully selected to help you grow your wealth.
Limited Time: Special $89 Stock Advisor Introductory Offer For New Members
Is IBD Leaderboard Right For You?
So, is IBD Leaderboard right for you?
Essentially, IBD Leaderboard is just like a trading alert service for trend trading.
Personally, I think there is a lot of money to be made from trading IF you are a very good trader with profitable trading strategies and good risk and money management.
However, the reality is that the majority of traders lose money.
Also, one trading strategy is NOT going to work in all types of market conditions.
Just like, trend following strategy is not going to work well in a bearish market or sideways market.
Personally, I would prefer investing to trading because it’s less time-consuming and less risky and it also aligns with my financial goals.
So, if you are risk averse and don’t have a lot of time to monitor all your trades, then I would not recommend IBD Leaderboard.
Is IBD just a huge advertising machine? There are so many ads in all of the IBD products. Always the push to buy more stuff.
I’m willing to pay for the product but I refuse to be sold to death.
Leadeboard is horrible. They pick stocks that are completely out of line with the IBD investing principles, and by the time they recommend buy something its reached its peak, then they tell you to sell at a loss. I honestly believe its a pump amd dump scam. I tried following Leaderboard investing principles on “paper” for a few months and I would have LOST about 20%. You’d be better off picking stocks by throwing darts at a dartboard. And they charge $70/month for that! Leaderboard isn’t about making money for investors, its about making money for IBD. STAY AWAY!!!