To make money in stocks, you need to focus on companies BEFORE everyone else does. And while many think of Alcoa (NYSE: AA), the second investment in my $100,000 real-money portfolio, as an out-of-favor cyclical play, I see a company that is on the cusp of rotating back into favor.

Of course, nobody likes to buy a stock in the face of imminent bad news. Falling aluminum prices throughout the last quarter clearly set the stage for a tough quarterly report. Last week, I predicted that “the company will actually deliver a small loss instead of the consensus $0.08-a-share forecasted profit.” (The consensus forecast stood at $0.03 a share in earnings for the fourth quarter when I wrote that, but had fallen to a $0.02 a share loss forecast by the close of trading on Monday, Jan. 9.) [Don’t miss a single move in my real-money portfolio. Go here to sign up for free updates.]

Why buy a stock that is likely to miss forecasts? Because as I also wrote last week, “the market anticipates a sorry outcome, and there’s a solid chance investors will start to focus on management’s expected long-term bullish outlook for supply, demand and pricing.”

How did things turn out? Well, Alcoa lost just $0.03.

How did shares react? As of this writing, they are actually modestly higher in after-hours trading. That’s because CEO Klaus Kleinfeld predicted that global aluminum demand would rise 7% in 2012, compared with 2011 levels. His bullishness largely stems from production plans at Boeing (NYSE: BA) and Airbus, along with auto makers that are using an increasing amount of aluminum in vehicles to save weight. Alcoa predicts demand will exceed supply in 2012, and if that happens, then aluminum prices could well finish the year closer to $1.10 or even $1.20 a pound. Prices are currently near $0.93. (Alcoa makes money when this figure moves above $1.)

Make no mistake, Alcoa had a tough year in 2011. Slumping aluminum prices offset so many of the savings that the company has achieved the last few years. Still, Alcoa managed to generate more than $1 billion in operating cash flow (and more than $600 million in free cash flow) in that lousy fourth quarter. Cash rose from $1.3 billion at the end of the third quarter of 2011 to $1.9 billion at the end of the fourth quarter. As I wrote last week: “Alcoa is now positioned to post respectable free cash flow in tough times, and poised to post stunningly high levels of cash flow when the global economy perks up.”

Also of note, aluminum inventories shrank from $3.2 billion in the third quarter to $2.6 billion in the fourth quarter. That underscores the company’s notion that a glut of aluminum is being worked off, which should have a positive future impact on pricing and profits.

In the next few days, analysts will issue updated profit forecasts for 2012.

Ignore them.

These forecasts are pegged off very depressed aluminum prices. If I read this correctly, demand will slowly rebound as China continues to swing deeper into a “net importer” position, spot prices for aluminum will rise, and so will analysts’ estimates. Their view at the start of 2012 has little to do with their view later in 2012.

Action to Take –> On Thursday, Jan.11, I will be adding to my current 300-share position with another 700 shares, bring my total position to 1,000 shares.

Here’s the Latest Snapshot of my $100,000 Real-Money Portfolio…