Sometimes cheap stocks deserve to be cheap.

Take Holland's Royal Ahold (NYSE:AHO) for example. Most folks probably don't even think of this company, and if they do, it's most likely in the context of the accounting scandal back in 2003 that walloped the stock. All the same, this is one of the largest food-sellers in the world -- through retail arms like Stop & Shop and Giant in the U.S. and various stores in Europe, as well as a food-service business that competes with firms like SYSCO (NYSE:SYY).

First-quarter results did show some progress, but they also show vast room for improvement. Sales were up more than 8% as reported (in euro), and margins expanded at both the gross and operating levels. If not for the inclusion of a class action settlement, the company would have been free cash flow-positive.

But it's not all quite so good. Sales in the U.S. operations were up nicely on an as-reported basis, but looking at the results in dollars makes a difference. On that basis, Stop & Shop's revenue dropped a little, Giant's revenue dropped by a mid-single-digit percentage, and the foodservice unit's growth was less than 4%.

To their partial credit, no one in management at Ahold is pretending that this will be a fast or easy turnaround. While they're sticking to old standby ideas like accelerating store openings, renovating old stores, and boosting private-label merchandise, the fact remains that Stop & Shop (which accounts for almost one-third of total revenue) is something of a mess. It can be cleaned up, probably, but it's a mess nonetheless.

With all that in mind, it's tough for me to say that Ahold doesn't deserve to be cheap. After all, why go in for Ahold shares when you could just as easily buy Kroger (NYSE:KR), WholeFoods (NASDAQ:WFMI), Delhaize (NYSE:DEG), Wal-Mart (NYSE:WMT), and so on? True, hedge funds are sniffing around the company, with an eye towards perhaps forcing a break-up. But who knows if or when that'll happen -- or whether it will be good news for you?

For more Foolish food for thought:

Wal-Mart is an Inside Value recommendation, Sysco is an Income Investor pick, and Whole Foods is a Stock Advisor recommendation. Take your favorite Foolish investing service for afree, 30-daytrial run.

Fool contributor Stephen Simpson but has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).