The market will go up and down, and industries will rise and fall. But if you can get past the short-term gyrations and look at the long-term picture, you can find big investment opportunities. Metals and mining stocks have been out of favor recently, but that just makes them stocks worth watching. For investors willing to go against the grain, Alcoa (NYSE:AA), Nucor (NYSE:NUE), and BHP Billiton Limited (ADR) (NYSE:BHP) should all be on your watch list.

The metal of the future
The fact that aluminum is the metal of the future should come as no surprise. After all, this lightweight but strong metal has been instrumental in the aerospace industry for decades. And while that industry will be key to companies like U.S. aluminum giant Alcoa, the more exciting events are earthbound.

A red Ford F-150. Source: Jesus David Pina, via Wikimedia Commons

The big industry shift is coming in the auto sector, with the Ford F-150's incorporation of aluminum signaling the beginning of a potentially huge opportunity. It's a matter of physics, all else being equal, that reducing the weight of a car will result in better gas mileage. That, in turn, means a cleaner environment and cost savings for the owner. But this isn't the only car company using the stuff -- for example, Tesla uses aluminum to reduce weight, too, increasing battery life and thus driving range. There are plenty of other car manufacturers making increased use of the stuff, as well.

Alcoa is working to be at the forefront of the industry, shifting from commodity products to specialty ones. For example, the aluminum giant has sold packaging businesses (low-margin commodity products) and invested in its auto and aerospace businesses (high-margin specialty products). To give an idea of how big this is, Alcoa expects demand in the auto sector alone to increase by nearly three times between 2015 and 2020. And it's positioning now to take advantage of that growth.

Yes, aluminum markets are oversupplied today. Yes, aluminum prices are weak. But that doesn't mean Alcoa lacks a bright future. If you can suffer through the occasional red ink as Alcoa shifts its business, this is one metals company using the downturn to prepare for better days.

Still strong, structurally speaking
So, aluminum is increasingly competing with steel in key markets like autos. But that doesn't mean that it will displace steel completely or replace it in other markets, like construction. And that's where a company like Nucor comes in. Nucor has a long history of profitability through market weakness and of rewarding investors with annual dividend increases. Alcoa, which trimmed its dividend in 2009 to preserve financial flexibility, can't boast that.

So, for income investors, Nucor will likely be a better long-term option. And that financial strength rests on Nucor's low-cost operations, which rely on electric-arc furnaces fed by scrap metal over older, more expensive blast furnaces that use mined iron ore. This is a big lead for Nucor, which has been able to turn profits in years where competitors using the older tech have bled red ink.

Like aluminum, the steel market is oversupplied and pricing is weak. But Nucor is built to withstand that and come out a better company. Moreover, with a long history of returning value to shareholders, there's more to like here than just the company's industry positioning.

Making iron the old-fashioned way. Source: Bundesarchiv, via Wikimedia Commons

Where metal comes from
Alcoa and Nucor are important metal producers. But there's another aspect to this space: mining. Alcoa actually handles everything from mining to end product, and Nucor recycles copious amounts of scrap steel. So, neither are really huge customers for miners. But that's not true throughout the metals space. A company like BHP Billiton has plenty of customers looking for the raw materials with which to create the building blocks of the world.

Iron ore is the big one for BHP, with massive operations in Australia near major Asian customers that are still building out their infrastructure. Iron ore provides roughly twice the profits of the company's next largest businesses, copper and oil. (Both of these produce about the same amount of earnings before interest and taxes; coal, its fourth major business, is a much smaller contributor.)

Like the other two companies above, BHP is facing notable headwinds from low-commodity prices and oversupplied markets. But it has been cutting costs and refocusing its business around core operations, including spinning off smaller, less profitable businesses. So it, too, is using the downturn to become a leaner and meaner competitor. That will position it well for the eventual upturn. Investors, meanwhile, have been rewarded with a decade of annual dividend hikes despite the market's turmoil. And, notably, BHP has remained profitable throughout the recent downturn.

Greedy when others are fearful
There's no question that metals and mining stocks have been weak, but that's when value investors start to get interested. Alcoa, Nucor, and BHP are all using the downturn to become better companies and, generally, have weathered the difficult markets well. So, if you are looking for stocks to watch in metals and mining, this trio is a great starting point. Eventually supply will ebb and demand will catch up and push prices for aluminum, steel, and iron ore higher.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Nucor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.