Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

BSET, JOUT: Ugly Ducklings Getting Ready To Become Swans?

|Includes: Bassett Furniture Industries, Incorporated (BSET), JOUT

Finding reasonably priced or undervalued stocks becomes more difficult when the broader markets trade at high valuations. This is exactly the situation right now and going purely by figures has its own perils as investors can get themselves entangled with value traps. A look at stocks trading close to their 52-week lows with positive recommendations from analysts can still throw surprises and Bassett Furniture Industries Inc. (NASDAQ: BSET) and Johnson Outdoors Inc. (NASDAQ: JOUT) come across as such potential turn around cases.

Virginia based Bassett Furniture Industries has several advantages to its credit. It is a vertically integrated furniture manufacturer that sells its products through a network largely owned by itself. The company has maintained growth momentum in top line and gross profit on an annual basis. A clean balance sheet is another positive with the company. Although operating and net profit margins have come under pressure lately, it is largely due to higher capital spending.

After opening four new stores during the latest quarter, Bassett Furniture has 59 company-owned and 34 licensed stores in the U.S. The company has undertaken an exercise to increase the number of owned retail stores and relocate several stores to better locations, a strategy that is likely to pay off in the future. Quite expectedly, these factors are swelling capital expenditure and putting pressure on margins. The stock remains attractive to analysts however, as it is priced below book value and represents a growing business. A forward price earnings ratio of 18.3 reiterates the view that earnings are likely to improve.

Johnson Outdoors is a leading outdoor recreation equipment company that saw its stock price plummeting to a 52-week low ahead of its second quarter results. Prolonged harsh winter weather during the quarter was expected to put pressure on the company's business and it turned out to be the case. The company's revenue dropped 5.9 percent during the March quarter while net income declined 17.2 percent. While this was disappointing, investors were happy to see that the weather effect took a less than expected toll on the company. In fact, the decline in revenues and profits was less than what was seen during the first quarter. As a result, the stock actually went up nearly 10 percent last week. Priced at a forward earnings multiple of 11, it still remains attractive though.

The company has a strong brand positioning and the current headwinds are only cyclical; something seasoned investors would appreciate. The fact that Johnson Outdoors operates a profitable venture and pays a regular dividend is likely to eventually attract investors to the stock.