These growth stocks are sinking. Is this a dip-buying opportunity?

Road furniture builder Hill & Smith (LSE: HILS) has found itself on the back foot in Thursday trade, the stock losing 5% of its value following the release of fresh trading numbers.

Still, I view this as nothing more than light profit-booking after recent strength, allied with the lack of anything ‘spectacular’ in today’s release. Hill & Smith’s steady share price ascent sent it to record tops close to £14 per share just this week.

The company, which makes bridges, barriers and road signage, advised that trading during the period from January 1 to April 30 matched the company’s expectations. Revenue clocked in at £191.3m, up from £165.4m a year earlier and up 7% on an organic basis.

In its core UK market, the engineer advised that “demand for our temporary safety barriers, variable message signs and bridge parapets remains solid and ahead of prior year” as the government’s Road Investment Strategy drove sales of its hardware.

And looking elsewhere, demand for Hill & Smith’s goods from the UK and US utilities industries remained solid, the company noted, while sales to its other international customers exceeded expectations.

Lauding the results, chief executive Derek Muir commented that “the group has delivered a solid start to the year despite mixed end market conditions.” He added that “overall, conditions in many of our infrastructure markets remain favourable and we continue to expect to report good progress in 2017 in line with our expectations.”

Growth star

There is certainly plenty to be excited about at Hill & Smith, in my opinion, as the massive investment made in Britain’s road network promises to keep sales of its roadside fixings moving steadily higher. And the firm’s improving performance on foreign shores also provides plenty of reason for cheer.

The Solihull business has seen earnings grow by double-digits in recent years, and the City expects further expansion of 10% and 5% in 2017 and 2018 respectively. While slightly expensive on paper, I believe Hill & Smith’s P/E of 18.3 times remains great value given its impressive momentum.

High risk

Like Hill & Smith, Pets At Home (LSE: PETS) has also found itself on the back foot in Thursday trade, the retailer shedding 6% of its share value.

But unlike its FTSE 250 peer, I am less than enthused by the firm’s investment prospects. Indeed, the City certainly expects recent earnings growth at the firm to skid to a halt as conditions in the UK retail sector become increasingly pressured by rising inflation, and brokers expect the business to punch another marginal decline in the year to March 2018.

I reckon investors should shun Pets At Home, despite its ultra-low forward P/E ratio of 11 times, as downgrades to this year’s projections (not to mention to 2019’s predicted 3% earnings recovery) are extremely likely. Latest ONS data showed retail sales in the first quarterly fall since 2013 during January-March.

In this environment it is not difficult to see discretionary spending on bones, collars and grooming sessions falling in the months to come, and with it, takings at Pets At Home.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.