As a guy who's as excited as the next investor by the -- rarely fulfilled -- dream of getting in early on the next Taser (NASDAQ:TASR) or Travelzoo (NASDAQ:TZOO), I also make a concerted effort to shop the bargain rack, a place where grocery stocks such as Kroger (NYSE:KR), Safeway (NYSE:SWY), and Albertson's (NYSE:ABS) have languished for a good long while.

But the blue-light special of the bunch has long been Winn-Dixie (NYSE:WIN), which turned up on one of my bottom-feeding screens months ago. Trading close to book value and beaten mercilessly by the Street, it immediately made my "pitiable underdog" watch list. Of course, some companies get their spankings because they richly deserve them, and that was the case at Winn-Dixie, as we've discussed in the past. But is this company an unrecognized value?

Today's fourth-quarter and year-end results don't signal the end of the hurt, but they do point to continued improvement. Yes, revenues were flat, and comps were down, and the quarter brought a loss of $0.16 per share. But $0.15 of the red ink came from discontinued operations, and restructuring and impairment charges were responsible for another negative nickel. Looking at the bright side, gross margins improved from the third quarter, and administration expenses dropped 0.6% from the period last year.

There's still plenty of work to be done, including remodeling of stores, restructuring of distribution networks, and rebuilding the brand as a service-oriented retailer. The firm will rely on borrowing to buttress its so-so balance sheets, but it has secured sufficient funds -- in management's opinion -- to get the job finished.

Like Kmart (NASDAQ:KMRT), Winn-Dixie is a turnaround story -- yes, without the bankruptcy benefit -- that sits on a pile of potentially precious real estate, much of which will be put on sale as the firm continues to shed unprofitable locations. True, this doesn't always make for the best long-term business plan -- as several Fools have pointed out -- but it can surprise the Street and make a stock soar.

Those betting that Winn-Dixie might rise, Lazarus-like, will want to take a much longer stare at the cash flow and balance sheets, not to mention get a better sense for the boardroom's capacity to raise this firm from the dead. But those brave enough to see the value and have faith that management's makeover plans will turn things around could reap some outstanding rewards.

Winn-Dixie is precisely the kind of situation Philip Durell slices and dices in order to come up with real bargains for The Motley Fool Inside Value . Take a free trial, and see what the Street is missing.

Seth Jayson is pulling for Winn-Dixie, but he has no position in any company mentioned. View his Fool profile here.