Four steel companies made our list: US. Steel (X), AK Steel Holdings (AKS), Allegheny Technologies (ATI) and Nucor (NUE). Shares of U.S. Steel and AK Steel were the worst performers for the past year, down about 72% and 67%, respectively, as the industry slashed production. Both companies and Nucor could lose money this year but see big gains in profits in 2010.

Four steel companies made our list: US. Steel (X), AK Steel Holdings (AKS), Allegheny Technologies (ATI) and Nucor (NUE). Shares of U.S. Steel and AK Steel were the worst performers for the past year, down about 72% and 67%, respectively, as the industry slashed production. Both companies and Nucor could lose money this year but see big gains in profits in 2010.

Four steel companies made our list: US. Steel (X), AK Steel Holdings (AKS), Allegheny Technologies (ATI) and Nucor (NUE). Shares of U.S. Steel and AK Steel were the worst performers for the past year, down about 72% and 67%, respectively, as the industry slashed production. Both companies and Nucor could lose money this year but see big gains in profits in 2010.

Nucor has outperformed the industry on the downside, and could outperform on the way up. Analysts think the company, which is based in Charlotte, N.C., will see results swing from a loss of 86 cents a share this year to a profit of $2.85 in 2010. That instills confidence in Nucor's $1.40-a-share payout and 3.2% dividend yield -- the highest in the steel group.

Among basic materials companies, Alcoa not only survived, but could thrive. The bellwether aluminum producer is expected to post a loss of $1.15 a share this year, but attain profit of 25 cents in 2010. Its P/E might look alarming at about 43, but could drop as profits keep rising. Alcoa's debt load is manageable, and it pays a small dividend -- 12 cents a share.

While there's sensitivity to consumer demand in a portion of MeadWestvaco's business, the paperboard manufacturer's beverage, health-care and pharmaceutical containers are more defensive. Also, the company is No. 1 in the paperboard market, which gives it some pricing control. Speaking of rich P/Es, MeadWestvaco shares (MWV)sell for 284 times estimated earnings for the next four quarters. It expects to prune as much as $300 million in costs by the end of 2010. That should help margins widen and earnings take hold when consumer demand revives.

Dow Chemical 's (DOW) earnings could jump 361% next year, to $1.06 a share. The stock trades for 78 times the next four quarters' earnings but looks much less expensive based on estimates for 2010. It closed the purchase of chemical maker Rohm & Haas in April, and synergies could lead to $1.3 billion of cost cuts by the end of next year. Dow sold a refinery and chemicals business for near $1 billion in May.

Chip-equipment manufacturers reported a 12% increase in June orders compared with May, boosting sentiment toward one of the industry's leaders, Applied Materials. The stock has fallen 34%, to about 13, from its August 2008 high of 19.60. It now trades for 2.5 times book value, well below the historic median. JPMorgan recently recommended accumulating shares because "a new multiyear semi-equipment cycle is beginning, and Applied Materials is likely to outperform peers."