You want to have a way of looking at all the stocks within the markets divided into categories by industries and then further into sectors. This allows you to see where the action is. If there is an outstanding stock within an industry it can help you in a number of ways. You may find a second leading stock in the same industry if the reason for the move is industry relevant. They may get taken along for a short ride but you'll be missing the great gains a leader will give you.
For example, when the first steel company made a deal to supply China some time back you may have missed the first but it could have given you a heads up on spotting the second.
Another benefit to looking at industries is finding supporting companies. So when the steel company was roaring, who was shipping it to China? You could look into the shipping sector and target who was going to lead that group to new heights.
How do I judge the health of an industry? It should be evident from what's going on within it. Looking at the top 5 stocks in any industry or sector is going to show you if that industry is profitable, making good sales and growing it's market.
Should I buy a great stock in a poor industry? Often a stock cannot move in isolation from it's industry no matter how good it is. Again think of human involvement here. You may think of a bank that's doing great guns at the moment but the weight upon that industry is just too much. No matter how good the individual bank may be it's not going to soar into being a lone leader whilst the industry is suffering. There are safer places to put your money.
If there are several great looking stocks in an industry, should I buy them all? No. Don't just piggy back onto similar stocks. In any sector there are not likely to be more than 1 or 2 truly great leaders. Best to focus on finding those leaders rather than just picking up the left overs. They may get taken along for a short ride but you'll be missing the great gains a leader will give you.