(FORTUNE Magazine) – IT TAKES A LOT of hard work in this age of slow growth and lowered expectations to capture a few yards of ground. But for the persistent -- among them, automakers, heavy-equipment manufacturers, and railroads -- the rewards are higher profits. Most of the industries on these pages will advance another few yards in 1994 as the economy chugs into its third year of subdued expansion.

-- AEROSPACE: when the going gets tough . . . With the military in retreat and airlines impoverished, lean times are here. David Vadas, an economist for the Aerospace Industries Association, forecasts that sales this year will fall more than $7 billion, to $126 billion, if not further. He expects the decline to continue in 1994. Both military contractors and commercial manufacturers are working down backlogs. While the prognosis for new military purchases is grim, commercial orders should start picking up in 1995 and 1996. The good news now is that manufacturers have pretty much absorbed the shock and have geared down their assembly lines accordingly. Says analyst Howard Rubel at Goldman Sachs: ''The industry has actually been able to show somewhat improving levels of profitability by keeping tighter control of costs.''

-- AIRLINES: glimmers of sunshine. With cumulative losses of $10 billion, the past three years have been the worst since the Wrights got the whole enterprise off the ground at Kitty Hawk. Thankfully, the turn may be in sight. Dave Swierenga, an economist with the Air Transport Association, expects the industry to break even in 1993 -- just barely -- and he cautiously looks for 1994 profits of $1.5 billion. Last year U.S. airlines carried 473 million passengers, up 5% from 1991 but a Pyrrhic victory: Fare wars bled all profit from the higher volume. This year, Swierenga predicts, the number of passengers carried will be up just 2% to 3%. The kicker is that the fares these passengers are paying have been rising since last fall. If the carriers don't lose control of themselves again, that will translate into profits. + -- APPLIANCES: alive and cooking. It has been a long spell in the freezer, but even mature industries warm up once in a while. Sales will expand at two to three times GDP growth, says Merrill Lynch analyst Jonathan Goldfarb. Reason: a recovery in homebuilding -- ''the average new house contains five to six new appliances'' -- and residential renovations, spurred by mortgage refinancings. FORTUNE estimates that profits will grow 20% this year and another 15% next.

-- AUTOS: burning rubber. Catch-up time is here for people who have postponed visits to the showrooms. FORTUNE expects buyers will drive away with 13.9 million cars and light trucks in 1993, up from 12.8 million a year ago. Next year will be even better, with sales hitting 14.8 million. The resulting roar you hear is the sound of unmuffled profits. Dean Witter analyst Ronald Glantz figures that the Big Three will ring in net operating earnings of $6.2 billion for 1993 -- vs. a $1.3 billion loss last year -- and a record $11.8 billion in 1994. Glantz looks for born-again Chrysler to rake in almost $2 billion in 1993, and $2.9 billion in 1994, as its LH cars and Grand Cherokees continue to scream off the lots. Ford should earn $2.2 billion this year and over $4 billion next. GM, with its tired product line, will make about $2.1 billion in 1993 and $4.9 billion in 1994, vs. last year's $1.3 billion loss. Market share gains make the smiles even broader in Motown. Thanks to a strong yen and successful efforts to narrow the quality gap, shoppers are giving Detroit a second chance. Another plus, says Lehman Brothers analyst Joseph Phillippi, is the market shift toward minivans, pickups, and sport- utility vehicles. ''We understand this market,'' he says. ''The Japanese don't.'' Now let's hope Detroit doesn't repeat history and go back to sleep -- the Japanese aren't dead yet. Another hitch, says Maryann Keller of Furman Selz, is uncertainty about Clinton's tax plan, which may give wealthier buyers second thoughts about high-end vehicles. Her outlook will remain optimistic only, she says, ''assuming no more Clinton shocks.''

-- BANKS: flush. Coin is still pouring into the vaults. According to the Federal Deposit Insurance Corp., America's banks posted record profits of more than $32 billion last year. Analyst Robert Albertson at Goldman Sachs expects the records will continue to fall. He sees especially bright prospects for superregionals Banc One and NationsBank. Most analysts credit the historically wide spreads between short-term interest rates banks pay to depositors and the long-term rates they earn on that money. In addition, banks are no longer losing as much on bad commercial real estate or on sour loans to highly leveraged companies. Says Lawrence Vitale of Bear Stearns: ''Bankers had a penchant for making mistakes, but since there has been little lending over the last two to three years, the mistakes that were on the portfolios have had a chance to season.'' Would narrower spreads end the parade? No, says Albertson, who differs with his colleagues in arguing that interest rates have had little to do with the banks' success. ''What has improved has been credit quality and productivity,'' he says. ''While neither can continue forever, the third part of the puzzle will be actual top-line loan growth -- the reason banks are in business in the first place.''

-- CHEMICALS: a bleaker beaker. Commodity makers can hardly win for losing. Volume is up, plants are more efficient than ever, and operating rates are climbing -- they're at 84% of capacity now and should hit 90% before year-end, says Fred Siemer of Chemical Research for Wall Street. Yet selling prices are as low as they were in 1981, when the industry was operating at 67%. For chemicals as a whole -- including companies that produce commodities, specialty chemicals, and pharmaceuticals -- FORTUNE thinks that relatively robust industrial production will keep profits heading up at double-digit rates. But that growth is from a miserable base: In 1992 earnings were still 71.4% below those of 1989. High-margin specialty chemicals are providing much of the lift. Bear Stearns analyst J. Jeffrey Cianci looks for earnings growth of just under 10% this year and better than 15% next, with help from a sharp increase in sales of oxygen to industries using it to promote more efficient combustion. The chemical industry's leadership in exporting -- it has piled up a cumulative trade surplus of $123 billion over the past decade -- will come under pressure as developing nations become more self-sufficient in producing commodities. Says Chemical Manufacturers Association chief economist Allen Lenz: ''We'll probably shift a higher portion to specialty chemicals.''

-- COMPUTERS: rewiring. Changes in technology, and the way people use it, are continually reinventing this industry. In the near term the turbulence translates into exploding volume growth but only modest revenue gains. Dataquest, a market research firm, estimates computer systems shipments will be up 35% worldwide through the end of 1994, while revenues will rise just 10%. In the $57 billion PC marketplace, price wars and new products have given unit sales a kick. Mark Litvinoff, PC analyst at the Gartner Group research firm, predicts that shipments of PCs will be up 30% through 1994. Thin margins have asphyxiated profits, though. The future of the industry may be on the lap. Litvinoff estimates that shipments of notebooks will be up 84% through 1994. Hand-helds, starting from a tiny base, will grow 61%. Mainframes remain embattled. Dataquest forecasts that worldwide revenues will be off 18% through the end of 1994. Sales of midrange computers will grow only 1%. These two moribund sectors represent a $45 billion market and help explain why IBM, which sells more PCs than any company in the world, still lost $5 billion last year. Among the more powerful machines, workstations will continue to be the stars. Dataquest estimates that revenues will rise 21%, to $11 billion, in 1994. Personal-computing software sales grew nearly a third in 1992, to $7.6 billion, according to Dataquest. Half that went to guess which company, whose name starts with M. The jury is still out on Microsoft's new Windows NT. But if it is successful it could further both the standardization of the computer industry and Microsoft's dominance of it.

-- FINANCIAL SERVICES AND INSURANCE: mixed returns. Brokerage houses are on their way to a third straight year of record profits. Low interest rates have sucked money into securities and have spurred corporate refinancings at a record pace. Meanwhile the brokerage firms continue to shrink their staffs. Says analyst James Hanbury of Wertheim Schroder: ''Fixed costs are not going up, and for some, like Merrill Lynch and Bear Stearns, they are actually going down.'' He estimates double-digit earnings growth this year but won't bet on more for 1994: ''At some point it ends.'' Bad news ends too, and that point may be in sight for life insurers. Says Weston Hicks of Sanford C. Bernstein: ''1993 is going to be the year when problem real estate assets peak and then follow a sort of protracted workout.'' Although individual life insurance is stagnant, and earnings from health insurance flat to down, Hicks sees an opportunity in companies that specialize in annuities: ''They could grow earnings at 12% to 15% through 1994.'' Property and casualty insurers will see earnings growth of 7% to 9% in personal business because premium revenues are rising faster than the costs of claims. Commercial business will be under pressure: Investment income is falling, and losses are rising.

-- FOOD: butcher, baker, private-label maker. Tightfisted consumers have taken some of the fun out of the business. Earnings for food processors should grow 6% to 7% in 1993 and 10% to 11% in 1994, according to Prudential analyst John McMillan. Nice, but a comedown from the late Eighties, when growth peaked at 15%. ''People are buying food the way they buy gasoline -- trying to fill up as cheaply as possible,'' he says. Private labels now occupy 18% and counting of the shelf space in grocery stores. Says McMillan: ''They have already outlived the recession, and companies like Wal-Mart are just getting started.'' Grain and feed exports will suffer this year because of slow global growth and the former Soviet Union's lack of hard currency, says Leonard Teitelbaum of Merrill Lynch. Next year should be better, he thinks: The U.S. recently renewed export credits to the former Soviets, and the likely passage of the North American Free Trade Agreement will ease Mexican import restrictions. Exports should climb 8%, to a total of some $14 billion.

-- FOREST PRODUCTS AND PAPER: feast and famine. It may not be what they had in mind, but environmentalists are giving tree men a boost. ''Lumber prices will rise 35% in 1993, another 5% to 10% in 1994,'' says analyst Joshua Zaret of Nomura Research Institute. ''This is solely due to lack of supply.'' Not that there are too few trees -- because of aggressive replanting, both public and private forests are growing 35% faster than they are being harvested, says Luke Popovich, a spokesman for the American Forest and Paper Association. ''But because of environmental restrictions, we can't get our hands on the trees.'' Paper is crumpling in the face of competition from Canada and Scandinavia, with currencies weaker even than the dollar. Disinflation in industrial countries is also putting a weight on prices, says Larry Ross at Paine Webber. Newsprint and uncoated white paper are likely to improve, he says, but ''recovery is the operative word. These prices have taken unprecedented declines in recent years -- 35% for white paper, 1989 to 1992.'' Ross predicts an 8% rise in 1993 and 15% in 1994 for the uncoated stuff. Even linerboard, a packaging staple that usually moves up with the economy, has dawdled. The current price of $300 a ton won't reach $350 until fall of 1994, if then, says Smith Barney analyst George Adler. At the 1988 peak, it was $410.

-- HOUSING: a strong foundation. Major builders should post double-digit earnings growth in both 1993 and 1994. FORTUNE expects starts of single-family homes to reach 1.13 million units this year, up from 1.04 million in 1992. Starts next year will climb to 1.2 million, the best since the late 1970s, when baby-boomers were streaming into the marketplace. Centex Corp., the largest U.S. builder, will post record earnings this year as unit sales rise 10%, says CEO Laurence Hirsch. Where's all the energy coming from? Mortgage rates are low and personal income gains, though tepid, are keeping pace with home prices. The result: Americans find it easier to afford a home than at any time in the past two decades. Buyers are stirring even the weak California economy. Kaufman & Broad, the biggest builder of single-family homes in the state, expects that strong demand for its entry-level models, averaging $155,000, will push unit sales up 50% this year, to 6,000. Fears of unemployment will surely keep some people out of the market. But experts predict sales of existing homes this year will still hit 3.6 million units, the most since 1979 -- and strength in resales frees sellers to move up to new and generally more expensive houses.

-- INDUSTRIAL EQUIPMENT: full throttle. With corporate profits high and cash flows strong, American companies are slaking their thirst for new machine tools, forklifts, trucks, you name it. Karen Ubelhart of Lehman Brothers figures the industry will see sales growth of 10% to 12% this year and 8% to 12% in 1994. Picking winners, says Paine Webber managing director Eli S. Lustgarten, is like choosing from ''good, better, and best.'' Good: construction machinery. Better: farm equipment. Best: machine tools. Heavy-truck sales will continue to surge this year at a 160,000-unit pace, says Lustgarten, then flatten to a more normal 150,000. Picking losers is much easier: The Japanese will surrender market share for most capital goods in the U.S. and abroad. The mighty yen makes their prices noncompetitive, and American companies are in fighting trim after cost cutting and restructuring. Ubelhart, counting on a recovery in Europe -- still the most important overseas market -- expects exports to grow 6% in 1993 and accelerate in 1994 to 9%.

-- MEDICAL SERVICES: not waiting for Hillary. No matter what Washington does with health care, trends already well under way are changing the business drastically. Says analyst Ken Abramawitz of Sanford C. Bernstein: ''Reform is ongoing; it's just that Clinton doesn't know it.'' HMOs stand to come out best. Todd Richter, an analyst with Dean Witter, thinks the $60-billion-a-year industry could grow at a 15% to 20% rate for the next two decades. HMOs are just what the doctor ordered, says Abramawitz. ''They are cost-effective managed-care alternatives that represent rational health care delivery.'' He forecasts earnings growth of 15% to 20% through 1994. The same pressures that help HMOs wound many hospitals. Abramawitz expects that the $350-billion-a-year industry will see little to no growth on average through 1994. Not all will do poorly. The ones earning good returns, says Richter, ''are driving down their costs and contracting with HMOs for increased volume.'' Richter also sees bright prospects for nursing homes, the third major sector in medical services, as America's population ages. He forecasts growth of 8% to 12% through 1994.

-- METALS: shining through. After restructuring only to be trounced by mini- mills, integrated steelmakers will join their small competitors in forging ahead. Consumption is expected to rise 3.5% this year and another 4% next because of surging auto sales and construction. Tightening enforcement of antidumping laws could also help by paring imports four million tons or more from their 1992 level of 15.7 million. If so, says First Boston analyst Thomas Van Leeuwen, domestic producers will increase shipments 10% in 1993 and another 5% in 1994. Prices, already up 5% to 6% this year, could climb another 5% to 10% next. That will be enough to turn last year's loss into a modest profit. Aluminum prices on the bellwether London Metals Exchange, currently 53 cents a pound, are down 9% so far this year. William Siedenburg of Smith Barney looks for 55 cents by year's end, and for 1994, ''with all 15 fingers crossed and an economic turnaround in Japan and Europe, 61 cents.'' Though producers are doing their best to cut costs, world stockpiles are high. One big reason: The former Soviet Union has been swamping the London exchange since the Soviet military stopped buying. So why are aluminum producers smiling? The demise of the Administration's BTU tax proposal. It's especially good news for Pacific Northwest smelters, which supply a third of the industry's output, says independent analyst Stewart Spector. They already face hydroelectric rate increases of 15% this year and 10% next. What is that glow on the horizon? Gold has ignited after its slide from $500 an ounce during the 1987 stock market crash. Inflation fears have fanned the flames. But more important, says precious-metals analyst George Milling- Stanley of Lehman Brothers, the Chinese are buying both for jewelry and investment. He thinks the fundamentals of supply and demand are sound enough to carry the price from its recent $365 to more than $400 by the end of 1994, a level last seen during the Gulf war.

-- OIL AND GAS: drifting apart. Natural gas will burn a little brighter. Demand will rise 3.5% this year and 2.9% next, says analyst Foster Corwith of Dean Witter. But prices have already risen sharply because capacity is down, the result of a long spell of low prices in recent years. Corwith expects wellhead prices to climb another 13% to 15.5% in 1993. Result: Profits will enjoy ''growth on the order of 20%, the strongest of the last seven to eight years.'' Oil will remain in the doldrums. Philip Verleger, visiting fellow at the Institute of International Economics, thinks benchmark West Texas intermediate crude, selling for about $20 a barrel this year, will rise 50 cents at most in 1994. ''Refiners' margins will continue under pressure due to stagnating demand and increasing environmental costs,'' he says. But Verleger doesn't rule out the possibility -- remote as it seems -- of a reconciliation with Iraq, which he says could knock crude prices down by as much as 20%. That would be devastating to domestic producers, but a boon to refiners. Since domestic production is expected to keep falling from the current rate of just under seven million barrels per day -- the lowest since 1955 -- the import share of the U.S. market will rise from 47% to more than half. Investment by American oil companies will continue to flow overseas. Robert Beck, economics editor of Oil and Gas Journal, says money is now heading for Latin America and the former U.S.S.R. -- ''and we may even see opportunities in OPEC countries, which are becoming strapped for capital.'' What's the betting on energy taxes? Robert McNally of Energy Security ) Analysis in Washington expects the U.S. to ''gradually increase transportation fuel taxes over the next decade to near-European levels.'' The resulting higher prices would dampen demand and cut oil imports.

-- RAILROADS AND TRUCKING: moving on. For America's railroads, the improvements have been like a slow train comin', steady and sure. The Department of Commerce estimates that revenue will be up just 3% to $30 billion this year, but profit growth will run well ahead. The railroads are reaping the benefits of smaller train crews and other cost-cutting measures, and are increasingly making money on intermodal traffic -- freight carried in containers that are easily transferred between rail and truck. Analyst Beth Fusco at Salomon Brothers estimates that average annual profit gains through 1994 for the five major roads she covers will range from 6% (Norfolk Southern) to 46% (Kansas City Southern Industries). Intermodal works both ways. Many truckers are turning their long-haul shipments over to the rails to save labor and fuel costs. Paul Schlesinger of Donaldson Lufkin & Jenrette thinks that carriers specializing in full truckloads will on average see revenue growth in line with that of the economy. The best performers, he says, are package carriers -- UPS and Federal Express -- and the regional less-than-truckload (LTL) carriers; both groups are growing at two to three times the rate of GDP. That's at the expense of long-haul LTLs, says Fusco; new regional distribution patterns are making their costly hub-and-spoke systems obsolete.

-- RETAILING: Tough customers. Shoppers will bag 4.5% more purchases in 1993 and 1994, according to analyst Margo McGlade at Paine Webber. Lower prices are coaxing buyers to computers, and the housing revival is spurring sales of appliances, electronics, home-improvement gear, and furniture. This trend has legs, says McGlade: ''The biggest spending takes place in the 12 months after you buy your house.'' Competition among discount stores remains high, in part because selling space has doubled in the past ten years. ''Good management is crucial in this kind of economic environment,'' says Edward F. Johnson of the Johnson Redbook Services research firm. ''Category killer'' stores such as Home Depot, Staples, and Petsmart remain strong. And Dean Witter analyst Patrick McCormick says membership warehouse club revenues should rise 21%, to $40 billion, by the end of this year and another 20% next. New investment is going into ) ''supercenters'' that combine grocery and discount stores. McCormick says the total is projected to grow from 50 today to 1,000 by 1997. If that happens, he adds, their sales will total $55 billion to $60 billion.

-- TELECOMMUNICATIONS: getting ready for tomorrow. The future is in the headlines as telecom giants position themselves, sliding and locking like tectonic plates, for the day when phone service will be only one of many they deliver. Meantime, there's the pedestrian here and now to get through. International service remains the fastest-growing sector as the market globalizes; U.S. companies are tough competitors. David Yedwab, a consultant with Eastern Management Group, predicts growth of 12% to 13% through 1994. Sales for long-distance companies will continue building at 5% to 7%. The telephone equipment business, led by strength in voice-mail systems, will return to profitability in 1993. Revenues of the regional Bell operating companies will rise 4% to 6% in 1993, and 6% to 7% in 1994, says Yedwab. The growth of new services like cellular is slowing, he adds, but their rising contribution to revenues will approach 10% by 1994.

CHART: NOT AVAILABLE CREDIT: FORTUNE TABLE/SOURCE: INDUSTRY PERFORMANCE MONITOR CAPTION: PROFIT FORECAST: EARNINGS-PER-SHARE GROWTH FOR 24 INDUSTRIES Here's how FORTUNE's forecast translates into profits for Standard & Poor's industry indexes. Industry Performance Monitor calculated the numbers.