The search for an out-of-favor sector may be no farther than your nearest grocery store. Yes, supermarket stocks are in trouble. Safeway (NYSE:SWY) announced that it was giving up on efforts to sell its Dominick's chain last night. That came after nearly a year of dangling the money-losing outfit to a jaded bidding audience that no longer responds to the scent of bloodied bait.

Dominick's came with baggage, both paper and plastic, as the union representing most of the company's workers was resisting efforts to shave labor costs. Meanwhile, the shortlist of believers in traditional food retailing was thinning out.

Safeway's shares have been more than halved over the past five years. Rivals Albertson's (NYSE:ABS) and Kroger (NYSE:KR) have suffered similar fates. Yet, as grim as those avalanches may appear, it could be worse. Winn-Dixie (NYSE:WIN) investors have seen their stock drop by 70% over the past 10 years.

Is the value hunter in you looking to buy in? Beware of the impulse purchase. Behind every price check there is a reality check. Supermarket chains are in the doldrums for a reason. With warehouse club chains such as Costco (NASDAQ:COST) and discount department stores like Wal-Mart (NYSE:WMT) gobbling up market share, even the meager margins of traditional grocers are starting to look like tempting fodder for the grinder.

As bad as things appear, they could always get worse. An industry shakeout will claim casualties, but at least those who remain will have thicker market-share slices. That won't be enough, though. The survivors will have to do battle with the demon donning a Wal-Mart smock before the trend is truly reversed.

So you want a shopping tip? Be patient. These stocks may very well continue to be marked down as they close in on the sector's expiration date.

Do you think traditional food retailers are doomed? Will discount department stores swallow what warehouse clubs leave behind? Is it too inconvenient to do your supermarket shopping at Sam Walton's place? All this and more -- on the Wal-Mart discussion board. Only on