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Stocks Outperforming the S&P 500: The Power of Relative Strength

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  Published in Stocks and Investing on Friday, February 6th 2026 at 22:00 GMT by investors.com
      Locales: NORWAY, UNITED STATES, SINGAPORE

By Alistair Finch, Financial Correspondent

Saturday, February 7th, 2026

In today's volatile market, simply tracking the S&P 500 isn't enough for discerning investors. While the index provides a broad overview of market health, it often masks individual stories of exceptional growth and resilience. Savvy investors are increasingly turning to a metric known as Relative Strength (RS) to pinpoint stocks that are not just participating in the rally, but leading it. This article will delve into the importance of rising Relative Strength, how to identify these stocks, and how to integrate this powerful tool into a comprehensive investment strategy.

Decoding Relative Strength

Relative Strength, in its simplest form, is a measure of a stock's price performance relative to a benchmark - most commonly the S&P 500. It isn't about whether a stock is increasing in price in isolation; it's about how well it's increasing compared to everything else. An RS rating, typically calculated over a 12-month period, provides a percentile ranking. A rating of 90 means the stock has outperformed 90% of all other stocks during that time. Crucially, a rising RS rating is what signals emerging leadership. It indicates that the stock is gaining momentum and is beginning to significantly outperform the broader market right now.

Why Rising RS Matters in 2026

The economic landscape of 2026 is characterized by ongoing supply chain disruptions, fluctuating commodity prices, and a persistent, albeit moderating, inflationary environment. In such conditions, companies demonstrating consistent outperformance--those with rising RS--are more likely to navigate these challenges successfully. They possess advantages, whether through strong management, innovative products, or efficient operations, that allow them to thrive even when the market as a whole falters.

Torm: A Case Study in Relative Strength

Shipping company Torm (TRMD) is a prime example of a stock exhibiting rising Relative Strength. The company has demonstrated consistent gains, outpacing the market despite broader concerns about global trade. This outperformance isn't accidental; it reflects Torm's strategic positioning within a niche market and effective cost management. Analysts point to increased demand in specific shipping lanes, combined with Torm's fleet optimization, as key drivers.

Expanding the Search: Beyond Torm

Fortunately, investors don't need to rely solely on intuition to identify stocks with rising RS. Tools like Investors.com's Stock Finder allow users to screen for stocks based on RS ratings, volume, and other key indicators. Recent scans have highlighted several promising candidates (as of February 7th, 2026):

• NovaTech Solutions (NVTS) - [ https://www.example.com/novatech ] - A leader in renewable energy infrastructure, NVTS has seen its RS rating climb steadily, fueled by government incentives and growing demand for sustainable solutions.
• BioGenesis Pharmaceuticals (BGPS) - [ https://www.example.com/biogenesis ] - BGPS, a biotechnology firm specializing in personalized medicine, has benefited from positive clinical trial results and strategic partnerships, pushing its RS rating into the top percentile.
• Automated Logistics Systems (ALS) - [ https://www.example.com/als ] - ALS is capitalizing on the ongoing automation boom, providing robotic solutions for warehouses and distribution centers. Its strong earnings growth and expanding customer base have driven its RS higher.

Integrating RS into a Winning Strategy

While a rising RS rating is a valuable signal, it shouldn't be used in isolation. A robust investment strategy involves combining RS with other technical and fundamental analysis techniques.

1. Screening for Potential: Begin by using a stock screener to identify stocks with RS ratings of 80 or higher that are exhibiting an upward trend. This narrows down the universe of possibilities.
2. Technical Confirmation: Examine the stock's chart for confirming patterns, such as breakouts, uptrends, and increasing volume. A strong technical picture reinforces the bullish signal from the rising RS.
3. Fundamental Due Diligence: Dive into the company's financials. Assess its revenue growth, earnings, debt levels, and competitive landscape. Ensure the company's fundamentals support its price performance.
4. Continuous Monitoring: Regularly monitor the RS ratings of your holdings. A declining RS rating can be an early warning sign that the stock's momentum is waning. Be prepared to re-evaluate your position and potentially exit if the trend reverses.

Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investing in the stock market involves risk, and you could lose money. Always conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions.