The holiday season of 2008 may go down in history as one of the biggest nail-bitters in the last few decades. Motley Fool analysts have assessed the state of retail going into this critical season -- the stocks, sales strategies, consumer trends -- and identified the winners and losers at the mall and in investors' portfolios. Click here for the complete report.

Black Friday may be drawing near, but investors in retail are drowning in red. And while red may be a cheerful seasonal color, there’s nothing festive about the 53% drop the S&P Retail Index Fund has posted over the past year.

We’ve been hearing for months that the holiday season might be chilled by frozen credit markets and lack of consumer confidence. As we move closer to the heart of the busiest shopping time of the year, though, it appears that the outlook keeps getting dimmer.

In anticipation of what could be one of the worst holiday seasons since the Great Depression, retail stocks across the board have sunk into territories not seen in years. While some retailers will barely make it past the holiday season alive (or in some cases, like Circuit City, not even make it to the holiday season), plenty of fabulous retailers have been simply hit by a downturn in near-term consumer spending trends, crushing their valuations.

Company

1-Year Return

P/E*

Nordstrom (NYSE:JWN)

(77%)

4.0

J. Crew (NYSE:JCG)

(75%)

6.6

Guess? (NYSE:GES)

(73%)

4.4

GameStop (NYSE:GME)

(63%)

7.4

Best Buy (NYSE:BBY)

(62%)

6.9

Bed Bath & Beyond (NASDAQ:BBBY)

(42%)

10.1

VF (NYSE:VFC)

(41%)

7.3

*P/E based on this year's expected earnings, provided by Yahoo! Finance.

Many retailers, even those with the strongest brand names and healthiest balance sheets, have seen their stock prices slashed by more than half over the last year. But how much lower can these companies really fall? Fundamentally, they have the strength to pull through the current conditions, and their upside potential is enormous for long-term investors. Over the past five years, most retailers were selling at P/E ratios in the mid-20s; now, all but one of the companies listed above are selling at single digit price-to-earnings ratios.

Like the items stocked on retailer shelves these days, these companies look like serious bargains. Has the worst been priced into these stocks yet? We want to know, so please take a moment to participate in our poll.

Thanks for voting! If you haven't already, check out some more Foolish analysis of the holiday retail scene.

Bed Bath & Beyond and Best Buy have been recommended by both Stock Advisor and Inside Value, and the Fool owns shares of both companies. GameStop is a Stock Advisor selection, while VF is an Income Investor pick.

Kristin Graham does not own shares in any of the companies mentioned in this article. However, she is eyeing a company on this list to purchase. Looks like she won’t be buying it till after the holidays, on account of the Fool’s disclosure policy.