My latest column is up at RealMoney.

Given that the grocery industry is typically classified as noncyclical, nondiscretionary and defensive, Supervalu’s (SVU) stock chart looks pretty scary. After reaching a high of more than $47 a share last year, the stock drifted down along with other grocers, then plummeted in late December and early January after it lowered its fiscal 2008 (which ended in February) earnings to a range of $2.91 to $2.97 a share before one-time acquisition-related costs. The original forecast was for $2.93 to $3.03 a share. The stock ultimately hit $26 in March.

When you cut through the noise, however, earnings estimates for the operator of the Shaw’s, Jewel-Osco and Albertson’s chains have been fairly stable over the last few months. The final tally for 2008 came in at $2.97, just a penny shy of the midpoint of the original range. Both the 2009 and 2010 estimates were raised a couple of months ago and have since been trimmed somewhat, but remain above the original levels. The company met or exceeded analyst estimates in each of the last four quarters.

Analysts expect Supervalu to post annual earnings growth of 6% over the next three to five years, an estimate I think is reasonable. I also think the company can expand its price-to-book multiple to the 1.39 industry average over the same period, which would add another 10% annually, for a total annual return of 16%.

Seen another way, if the debt reduction continues, I see no reason the shares wouldn’t merit the 13 times earnings accorded to Safeway. If the company earns “about” $3.30 a share in fiscal 2010, the math could work out to a $43 share price, or a 36% increase from the current level. As long as they don’t get too hung up on the day-to-day fluctuations in estimates, investors could find that Supervalu lives up to its name.

Disclosure: At time of publication, William Trent has no financial position in the companies mentioned in this article.