Here's Why You Should Retain Reliance Stock in Your Portfolio

Reliance, Inc. RS gains on growth through strategic acquisitions, its diversified business model and product base and strong liquidity amid headwinds from weakness in certain markets and tariff-driven cost pressures.

RS’ shares have gained 10.8% in the past year compared with the Zacks Mining – Miscellaneous industry’s 63.2% rise.

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Let’s find out why RS stock is worth retaining at the moment.

Acquisitions & Strong Liquidity Aid RS Stock

RS benefits from its resilient business model serving diverse end markets, strong execution and actions to drive growth through acquisitions. It has been following an aggressive acquisition strategy for a while as part of its core business policy to drive operating results. It has completed 76 acquisitions since its IPO in 1994, which have expanded its product diversification and value-added processing capabilities.

The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals align with its strategy of investing in high-quality businesses. The buyout of Southern Steel Supply also expanded the company’s reach in the Southern United States and boosted its value-added processing services. The buyout of Cooksey Iron & Metal Co also boosts Reliance's presence in the fast-growing Southeastern market. The acquisition of American Alloy has expanded Reliance's product portfolio with specialty carbon steel plates as well as new production capabilities.

In August 2024, RS completed the acquisition of FerrouSouth toll processing assets. The integration of FerrouSouth’s tolling operations enhances its toll processing capabilities and expands capacity for Feralloy’s existing operations in the Southeastern United States.

Meanwhile, demand for non-residential construction, including infrastructure, Reliance’s largest end market by volume, strengthened in the fourth quarter of 2025 compared with the prior-year quarter. The company expects demand in this sector to remain healthy through the first quarter of 2026, supported by ongoing investment in data centers, manufacturing facilities and public infrastructure projects.

The company’s strong liquidity position also allows it to drive shareholder value. Reliance repurchased approximately 716,000 shares of its common stock during the fourth quarter for $200.1 million. RS also bought back shares worth $594.1 million during 2025.

The company’s board, last month, raised its quarterly dividend by 4.2% to $1.25 per share. RS ended 2025 with cash and cash equivalents of $216.6 million. It generated $831.4 million in cash flow from operations during 2025, aided by prudent working capital management and profitability. RS deployed $1.18 billion of capital towards stockholder returns and organic growth activities last year.

Reliance Exposed to Demand and Cost Headwinds

While RS is seeing growth in several of its major markets, the semiconductor market remains a weak spot. Demand remained soft in the fourth quarter relative to the year-ago quarter, as elevated inventory levels across the supply chain continue to weigh on activity. Reliance expects these headwinds to persist into the first quarter.

Demand in the commercial aerospace market also remains soft. Demand remains sluggish in this market due to high inventory levels in the supply chain. While RS expects a gradual improvement in 2026 on higher build rates, the softness in this market is expected to continue in the first quarter.

Reliance is also exposed to aluminum cost increases due to tariffs amid an elevated supply and soft demand environment. Higher-than-expected aluminum costs led to last-in, first-out (“LIFO”) expense of $114 million for 2025 compared with the company’s estimate of $100 million, weighing on margins. RS sees LIFO expense of $100 million in 2026, mainly from higher carbon and aluminum product costs.

RS’ Zacks Rank & Key Picks

RS currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space include Albemarle Corporation ALB, Compania de Minas Buenaventura S.A.A. BVN and Balchem Corporation BCPC.

While ALB and BVN sport a Zacks Rank #1 (Strong Buy) each at present, BCPC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ALB’s 2026 earnings is pegged at $7.87 per share, indicating a rise of 1,096.2% year over year. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average surprise of 57.8%.

The Zacks Consensus Estimate for BVN’s 2026 earnings is pinned at $3.45 per share, indicating a 4.6% year-over-year increase. BVN’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 80.4%.

The Zacks Consensus Estimate for BCPC’s 2026 earnings is pinned at $5.47 per share, indicating a 6.2% year-over-year increase. The Zacks Consensus Estimate for BCPC’s 2026 earnings has been revised 1.1% upward over the past 60 days.

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Reliance, Inc. (RS): Free Stock Analysis Report

Albemarle Corporation (ALB): Free Stock Analysis Report

Buenaventura Mining Company Inc. (BVN): Free Stock Analysis Report

Balchem Corporation (BCPC): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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