The phrase “failure of imagination” has returned to the lexicon. It may turn out to be an appropriate catchphrase for the just-ended 2000s.

It also applies to a few situations on Wall Street, where investors seem unable to wrap their arms around the idea that things won’t always be the way they are.

That’s certainly true for Sealy Corp. (NYSE: ZZ). The mattress maker released earnings today that reversed a year-ago loss but reflected the country’s persistent economic doldrums. Let’s face it: People don’t buy pricey mattresses during a downturn. But investors are pricing Sealy as though the company is always going to be moving mattresses against the economic tide, and that’s not true.

For three years, Sealy — the world’s largest bedding maker, with about a 20% share of the $6.9 billion mattress market — posted earnings of roughly $0.82 a share. Then the housing market fell to pieces and, with it, Sealy’s results. The company posted a nasty fourth-quarter loss in 2008 and has struggled along since. Not all of the furniture market was so lucky: Competitor Simmons went bankrupt.

But a recovery will come, even if it likely will lag housing, and long-term investors should consider these shares not based on what will happen in the next two quarters but what will happen in the next two years. (Scroll down to “Stock #10” in this report for a great way to profit from the housing recovery.) A return to Sealy’s sweet spot — roughly $0.82 in per-share earnings — should propel these shares, currently trading at less than $3.50, north of $12, their pre-financial crisis range.

Sealy shares came under intense pressure today after the company’s earnings report, which came as a disappointment. There was some expectation in the air: Competitor Tempur-Pedic International Inc. (NYSE: TPX) earlier this month announced better-than-expected preliminary fourth-quarter results both in terms of revenue and earnings, and also upped its guidance for 2010. Sealy shares had gained about +20% since Tempur-Pedic’s release. They gave it back Thursday, however, closing down -9.7%, to $3.46, making it one of the biggest decliners on the New York Stock Exchange.

These are not shares that look particularly great from a balance-sheet perspective: The company has negative shareholder equity — liabilities exceed assets — and that’s a situation that has persisted for years. (The gap does appear to be narrowing some, however.) On the plus side, though, the company has a lot of cash on hand. It’s also done a better job collecting on receivables, and it has pared inventories. The company is more than able to hunker down and wait for a recovery.

The question, of course, is could you sleep at night if you owned these shares? That depends entirely on your view about the future and your goal for the trade. Short-term traders are likely to see some valuation return after the post-earnings reactionary smoke clears. Longer-term investors who believe in strong brands and are confident in a recovery likely will rest easy knowing that there shares are poised to mirror the economy‘s steady growth during the next several years.

Buy Sealy when it’s selling like a company that struggles to earn two cents a share and sell it when Wall Street reprices it with a fair value commensurate to its industry-leading position. That’s a strategy that can make any investor’s dreams come true.