Occasionally, it can be worthwhile to scan the list of stocks trading on the dreaded 52-week low list. I wouldn't recommend using it exclusively, as the overwhelming majority of companies found there have hit rock bottom for concrete reasons. However, it can sometimes be a reliable way of spotting beaten-up stocks that are ripe for a rebound. At the bottom of today's trash can, nestled underneath a discarded closed-end municipal bond fund, is specialty retailer Pier 1 Imports (NYSE:PIR).

The nation's largest specialty retailer of imported items offers shoppers at its 1,100 stores a wide assortment of baskets, candles, furniture, and other home interior furnishings imported from more than 40 countries. Consumers' appetite for the exotic has waned lately, sending shares of Pier 1 sliding steadily south since March.

The beginning of the downfall roughly coincides with the release of fourth-quarter and fiscal 2004 year-end results that were troubling on a number of fronts. Top-line revenues for the year grew 6.7% to a record $1.87 billion; however, much of the gain was fueled by expansion. During the year, 120 new stores were opened, but comps fell by 2.2%, breaking a string of 11 years of same-store sales increases. Furthermore, the uptick in sales was partially offset by a 52-basis-points rise in selling, general, and administrative expenses, which trimmed operating income by 9% and scaled back earnings from $1.36 the prior year to $1.31.

Unfortunately, year-end weakness spilled over into the first quarter. Estimates for an April same-store sales increase of 3% to 5% proved to be overly optimistic, as reduced traffic late in the month actually led to a decline of 1.7%. After Pier 1 posted disappointing April results, first-quarter guidance was slashed by one-third to $0.14 to $0.21.

Declines in traffic, conversion rate, and average ticket all spelled an acceleration in the sales falloff during the month of May. With a drop in same-store sales of 7.6%, Pier 1 trailed only a handful of companies -- such as the Bombay Company (NYSE:BBA), Hancock Fabrics (NYSE:HKF), and Haverty Furniture (NYSE:HVT) -- for the title of worst May comps. By contrast, the comps of competitor Williams-Sonoma's (NYSE:WSM) Pottery Barn division rose by 10% in the first quarter. Pier 1's decline was much steeper than anticipated and led to yet another downward revision in first-quarter guidance to $0.12 to $0.14.

By all accounts, this first quarter has been disastrous for Pier 1. Promotional events around Mother's Day and Memorial Day were disappointing, margins suffered as a result of inventory markdowns (the bane of the retail world), and earnings (announced before the market opens tomorrow) will likely fall far short of last year's $0.21.

However, those who believe that Pier One's first quarter was nothing more than a temporary stumble may find the current valuation to their liking. Much of the bad news is discounted in the price, which at $17.30 is 25% below where the stock was trading back in April. With nearly everyone expecting dismal first-quarter numbers to be released tomorrow, missing by a penny or two should elicit little response. A surprise to the upside, on the other hand, might just be interesting.

Read other Foolish thoughts on Pier One's recent downward spiral from mediocre to bad to worse.

Fool contributor Nathan Slaughter owns none of the companies mentioned.