When Peter Lynch ran the Fidelity Magellan mutual fund, it managed to dramatically outperform the market throughout his tenure. One of the open secrets to his success was the mantra "buy what you know." By that, Lynch meant that investors should take advantage of personal knowledge and expertise in order to find values that the market may be overlooking. More often than not, counseled the master, potential stock values may be right below your nose. An intuitive disciple of Lynch, my wife recently uncovered and invested in a few companies that would have made the master proud.

Looking for trouble
About a year ago, the closest grocery store to our home was a Thriftway, owned and operated by the now-bankrupt Winn-Dixie. That store was dark, dirty, poorly stocked, and expensive relative to the other chains in the area. Although it occupied an extremely desirable corner surrounded by thriving businesses, the store itself regularly resembled a ghost town. We avoided that Thriftway like the plague (and judging by its emptiness, so did the rest of the neighborhood), instead opting for alternative stores like the Bigg's hypermarket run by SUPERVALU (NYSE:SVU) or the Meijer that was just down the bend.

Lost on the Thriftway management was the importance of basic execution and customer satisfaction. Rather than focusing on keeping its own house in order, Winn-Dixie instead chose to cry that Wal-Mart (NYSE:WMT) and its "always low prices" philosophy was harming its business. Locally, that seemed like an odd complaint, as Wal-Mart hadn't yet opened a directly competitive Super Wal-Mart. Rather than pointing the blame at competition that didn't even exist, it could've helped stave off its demise locally by keeping better watch over its own operations and providing a decent shopping experience for the neighborhood it supposedly served.

A silver lining
Fortunately for the neighborhood, as part of its desperate grasp at survival, Winn-Dixie closed all of its local Thriftway stores. The nearby location was taken over by Kroger (NYSE:KR), which remodeled and reopened the store last December. What had been a ghost town was instantly transformed into one of the busiest stores in the area. The parking lot that had always been empty is now often filled beyond capacity, and the store itself has been completely rejuvenated. The lighting is brighter, the aisles are cleaner, the selection is better, and the prices are much more reasonable. As a well-run store in a desirable location, the Kroger has shown the value of proper execution in the grocery business.

Kroger still faces the Wal-Mart threat and is still recovering from the West Coast strike that hobbled its own business as well as that of its competitor Albertson's (NYSE:ABS) last year. Kroger's market price still reflects those worries. On the flip side, however, the same location that my wife avoided like the plague is now her favorite grocery store. If the way Kroger has turned around our former neighborhood Thriftway is indicative of Kroger's prospects for the future, then it may very well be a classic Lynch "buy what you know" investment and a potential survivor of the Wal-Mart invasion.

Another face-lift
Kroger is realizing its success in part by refreshing and revitalizing a formerly run-down store in a prime location. On a larger scale, similar redevelopment is happening at another local institution, Kenwood Towne Centre. When General Growth Properties (NYSE:GGP) bought the mall, it embarked on a huge redevelopment effort. Situated on prime real estate in the heart of town, the mall had nevertheless not aged well and was in desperate need of revitalization. Now at the end of a multiyear renovation, it sports outward-facing stores, more marquee restaurants (such as Cheesecake Factory (NASDAQ:CAKE)), and a much livelier atmosphere. Not only has General Growth added additional revenue sources with its redevelopment, but also with the three-hour waits common at the Cheesecake Factory, it has added a way to keep a captive audience of shoppers who are waiting in line for their meals. It's a brilliant strategy and an investment that's beginning to pay off.

Just as Kroger is bringing new life to the old neighborhood grocery store, General Growth is bringing new life to the old neighborhood mall. And just as my wife observed that the Kroger is doing much better than the Thriftway ever did, she noted that Kenwood looks busier than it has in years. Another Lynch-style observation and investment, perhaps?

Hidden in plain sight
It's amazing how often excellent stock market values can be hidden in plain sight, just waiting for the next Peter Lynch to notice them. Fortunately for me, I have my wife to point out the potential value investments available in our everyday life. Unfortunately for the rest of the world, I am the only recipient of her counsel. There is, fortunately, a different guide available for everyone else. Philip Durell, analyst for Motley Fool Inside Value, has put together a portfolio of value-priced, buy-what-you-know investments that together have trounced the market by more than 7% since inception. The companies he has selected include several market leaders that touch our everyday lives. That so many well-known firms could be found at a value price is a testament to the power that Lynch's style still carries today.

Want to find out what other values are hidden in plain sight? A free 30-day trial of Inside Value starts here. If you want a real value, Inside Value is available for a limited time at a 25% discount.

Fool contributor and Inside Value team member Chuck Saletta has an immediate family member with financial stakes in two of the companies mentioned in this article: his wife owns shares of General Growth Properties and Kroger. The Fool has a disclosure policy.