Despite the roller-coaster ride, there has been one good thing about this market: It's caused a bunch of stocks to get really cheap.

Now, I'm not necessarily talking about the high-profile losers. Washington Mutual (NYSE: WM) may be at or near 10-year lows, but big banks have huge headline risk. Their balance sheets are so opaque that it's unclear what these companies will look like after the subprime crisis has passed.

The cheap stocks I'm talking about aren't at ground zero of the housing bubble and credit crisis. They're being killed due to recession fears. These stocks aren't making headlines, but they have quietly become bargains. One of my favorites is Office Depot (NYSE: ODP).

The business
Office Depot is an office products and services retailer with about $15.5 billion in annual revenue. You're probably the most familiar with its 1,500-plus stores worldwide. However, in addition to the stores, Office Depot has a direct sales division. This division -- which accounts for about 30% of the company's revenue -- not only sells to small businesses through catalogs and the Internet, but also targets larger companies using a direct sales force.

The company is big, but it's still growing. Over the past five years, Office Depot has been expanding its revenue by 6.5% and earnings by nearly 15%. Though the North American market may be nearing saturation, Office Depot plans to add 75 stores in 2008. This is still a growth story.

The competitive position
Retailing is a tough industry. Office Depot's biggest competitors are Staples (Nasdaq: SPLS) and OfficeMax (NYSE: OMX). The three companies have similar store formats and product selection and have struggled against each other for years. While Staples has been the most successful, all three companies have grown over the past decade.

But these big-box stores are only a fraction of the competitive picture. The office products market is extremely fragmented -- Office Depot, Staples, and OfficeMax have only about 12% market share combined according to a recent report by Standard & Poor's. Other competition ranges from tiny mom-and-pop shops to Wal-Mart (NYSE: WMT). Even Best Buy (NYSE: BBY) is a competitor -- more than one-fourth of Office Depot's revenue is derived from sales of technology products.

Yet Office Depot has a solid competitive position. It has a well-recognized brand, established customer relationships, a large distribution network, and stores in hard-to-duplicate locations. The fragmented market means that there is still room for the company to gain market share. Plus, Office Depot has excellent management. The company's CEO, Steve Odland, was at the helm of AutoZone (NYSE: AZO) from 2001 to 2005. He grew both market share and profits significantly during that period and tripled the share price. This guy knows retailing.

The valuation
Despite its growth potential and its competitive advantages, Office Depot is dirt cheap. It's trading for just over seven times trailing earnings and slightly more than its book value. The company has a solid balance sheet with a manageable amount of debt.

What's more, since 2005, Office Depot has repurchased shares and reduced its outstanding share count by 12%.

The risks
It's rare to get a good business this cheap, so when you see bargains like these, try to understand why the price has dipped. I see several reasons. First, Office Depot had a minor accounting restatement last year because of revenue recognition issues. But I don't consider this a major problem.

A more important factor is a potential 2008 recession. Office Depot has already felt the slowdown. A quarter of the company's retail sales comes from California and Florida, two of the worst-performing housing markets in the country. As a result, Office Depot's revenue growth has stalled. Both its same-store sales and year-over-year earnings declined last quarter. More recently, in mid-December, the company warned investors that its poor performance in these two states has spread to other parts the country.

The Foolish bottom line
The good news is that with these bargains, a lot of the bad news is already priced in. The business is solid, and in a few years, today's price will seem like a great deal, in my opinion.

Of course, Office Depot is just one of the excellent bargains available right now -- and it's a stock that we're investigating for our Inside Value investing service. And although Office Depot is an excellent stock -- I own it -- I think there's an even more compelling retail opportunity right now.

That opportunity was one of the top recommendations in our December newsletter. Read about it, and all our other picks, by joining Inside Value free for 30 days. There is no obligation to subscribe.

Fool contributor Richard Gibbons can simultaneously be greedy and fearful. He owns shares of Office Depot and the retailer recommended by Inside Value, but does not have a position in any of the other stocks discussed in this article. WaMU is an Income Investor recommendation. Wal-Mart is an Inside Value pick. Staples is a Motley Fool Stock Advisor selection. Best Buy is an Inside Value and Stock Advisor pick. The Fool's disclosure policy has got game.