Profit From Wall Street Analysts’ Blind Spot: Apple Inc. (AAPL), Las Vegas Sands Corp. (LVS), 3D Systems Corporation (DDD)

3-D printing stocks also got ahead of themselves, as 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) both rose over 150% in 2012 before coming back down as investors cooled on their prospects.

Analysts’ blind spot

On the opposite side of the spectrum, analysts around the world all listed balance sheet strength as being of very low importance.

Balance sheets don’t matter till they do. This can lead to absolute disasters when investors ignore massively leveraged companies. A good historical example is Las Vegas Sands Corp. (NYSE:LVS) around 2006-2007. The company pursued an ambitious expansion plan by building a casino in Macao funded by debt. The stock hit a high of nearly $140 per share in 2007 before almost going bankrupt in 2009, hitting a low near $1.50 in March 2009. Throughout this time, the average analyst rating was “buy” until the stock hit $10 a share, at which point the average analyst rating fell to just “hold.”

There is a positive aspect to analysts ignoring balance sheets: Companies with exceptionally strong balance sheets can be undervalued by the market if the company experiences any headwinds and investors sell off the stock. While analysts are rarely negative, investors can profit from their balance sheet blindness by avoiding highly leveraged companies and generally paying attention to balance sheets.

The article Profit From Wall Street Analysts’ Blind Spot originally appeared on Fool.com.

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends 3D Systems, Apple, and Stratasys (NASDAQ:SSYS). The Motley Fool owns shares of 3D Systems, Apple, and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.