Alcoa (NYSE:AA) disappointed big-time yesterday, with earnings missing forecasts by about 32%. But investors should look past the Alcoa earnings headlines and consider the merits of buying AA stock right now — especially if they are the buy-and-hold type.

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-per-share earnings 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. Alcoa profits were also up significantly from $61 million, or six cents per share, a year ago. The company also affirmed a growth forecast of 12% for fiscal 2011, as well as reasserting claims that aluminum demand will double by 2020.

Encouraging signs, to be sure. What’s more, AA stock 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 over $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.

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 Q1 of 2010. The company has seen seven straight quarters of significant year-over-year growth in EPS and six consecutive quarters of big top-line 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.

What’s more, the valuation numbers scream that Alcoa is a bargain buy. The forward P/E of AA stock is a mere 8.5. The five-year price/earnings-to-growth ratio is just 0.25. Price-to-book is 0.69. This stock is a heck of a deal by almost any measure.

Throw in the fact that aluminum prices and demand eventually will recover, and you have a good long-term buy here.

Of course, that demand recovery could be two years or three years or longer. And we all know that Wall Street is far from rational in the short term and will sell off good stocks at a moment’s notice. So there might indeed be more troubles in store for Alcoa in the near future.

But if you are looking for a long-term investment to buy and hold, you might not find many better bargains than Alcoa after the earnings overreaction.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.