Pier 1 Imports (PIR) stock plummeted 14% last Thursday after the company posted a second-quarter earnings miss and lowered its full-year guidance.

The good news, though, is that big overreactions like this are perfect buying opportunities for investors. Pier 1 stock is definitely an opportunity knocking — and you should be prepared to open the door. Here are four simple reasons why.

#1. Leadership

Jim Cramer interviewed Pier 1’s CEO Alex Smith on last Thursday’s edition of Mad Money, and Smith was very frank about the mistakes his company made in the second quarter. He wasn’t willing to simply blame the broader traffic slowdown that hit the retail industry in July, as so many others have done.

Instead, he preferred to discuss the internal choices Pier 1 made — such as focusing on boosting marketing for its online business, which led to the company taking its eye off the ball ever so slightly. It’s refreshing to hear the CEO of a public company be so candid about his or her business. It’s a rarity for sure — and a factor that sets Pier 1 apart.

#2. The Turnaround

And that brings us to the success Alex Smith’s already had. After a successful career at TJX Co. (TJX), Smith was hired in February of 2007 after Pier 1 had lost $228 million in fiscal 2007 (February year-end) and $40 million the year before that.

Pier 1 went on to lose money for two more years, but then Smith got things back on track. Since fiscal 2010, when the company generated its first pre-tax profit of $32 million, it’s gone on to increase that number to $201 million in fiscal 2013.

Since the market lows of February 2009, which coincides with its last year in the red, Pier 1 stock’s compound annual growth rate is 175%. A $10,000 investment is worth over $1 million today — and after PIR’s 14% drop last week.

#3. Bright Spots in a Weak Sector

Of course, that doesn’t mean I think an investment in Pier 1 stock at this point is a slam dunk, as the retail industry has definitely hit a bump in the road. For Pier 1, same-store sales are slated to be around 5% for fiscal 2014, down from 7.5% in 2013. The company’s earnings per share are also slated to be $1.23 in 2014 — the lower end of guidance and a small improvement over the $1.20 per share earnings of 2013.

That’s scant growth for a company that was boosting operating earnings by double digits — and a large part of the reason for the stock’s recent 14% drop. But I’m optimistic that Pier 1’s revised guidance will prove to be conservative by the time it announces fiscal 2014 results in April.

Besides, retail is a cyclical business; you’re not always going to be hitting home runs. And despite that, there are a lot of good things still going on at Pier 1, including a strong recovery in e-commerce. Smith closed its online business in 2007, revived it in 2012 and just one year later the division’s revenues were 5% of its overall sales.

Averaging 1.4 million visitors per week, the site’s traffic is equal to some of its specialty store competitors who’ve been in the game a lot longer. That’s a promising sign long-term.

The Bottom Line

Of course, Pier 1 stock will likely continue to experience some serious volatility until there’s cold hard proof that things are getting back on track. The best strategy: Establish an amount you’re prepared to invest in PIR. Then, buy a one-third position today, another third if it drops after announcing third-quarter earnings in mid-December and the final third before its Q4 announcement in the spring.

All in all, Pier 1 stock is fairly valued when compared to its peers. Should it get back on track, which I believe it will, you’re buying growth at a reasonable price — and that’s always a good thing.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.