The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. NEW YORK ( InvestorPlace) -- Alcoa ( AA) disappointed big-time Tuesday, with earnings missing forecasts by about 32%. But investors should look past the earnings headlines and consider the merits of buying Alcoa stock right now, especially if they're buy-and-hold types. Here's the news: Alcoa stock was trading down as much as 5.5% in after-hours trading Tuesday after the aluminum company reported profits of $172 million, or 15 cents a share, for the third quarter. That was well short of the 22 cents EPS forecast from Wall Street investment analysts.
But there are signs of life at Alcoa. The company posted sales of $6.42 billion, which topped forecasts of $6.24 billion. The company also affirmed a growth forecast of 12% for fiscal 2011, as well as reasserting claims that aluminum demand will double by 2020. Also See:Why Occupy Wall Street Misses the Point Encouraging signs, to be sure. What's more, Alcoa exec Klaus Kleinfeld summed up Alcoa's bulletproof balance sheet very succinctly in the earnings conference call: "Alcoa is a confident company in a nervous world. We are well prepared for whatever lies ahead, with more cash on hand, lower debt and continued focus on profitable growth." Kleinfeld is right. The company has $1.2 billion in cash on its balance sheet. It has more than $9 billion in total debt but $41 billion in assets. The biggest headwind to Alcoa, of course, is that demand is weak and aluminum prices are soft. Aluminum prices fell about 12% in the third quarter, continuing a downward spiral that has weighed on AA stock and hurt margins for some time. Alcoa is off a gut-wrenching 33% year-to-date in 2011, and about 75% below the 2008 peak for AA stock prices -- currently around $10 from about $43 three years ago. Also See:3 Stocks to Sell Before January But there are many reasons to think Alcoa is at or near a bottom and has adjusted to the tough market environment. The company has been profitable since the first quarter of 2010. The company has seen seven straight quarters of significant year-over-year growth in EPS and six consecutive quarters of big revenue growth over the previous year. Throw in decent numbers this quarter except for the profits, and you have some fairly good fundamentals behind Alcoa.