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While Wolseley (LSE: WOS) dipped after the release of latest quarterlies, I reckon this further retracement from recent all-time highs (the stock has hit peaks above £50 per share in March) represents a chance for dip buyers to pile-in.

Wolseley said sales detonated 16.7% during February-April, to £4.27bn. While favourable exchange rates boosted the top line by £423m, the plumbing play still witnessed a strong uptick in like-for-like revenues. These rose 6.6%, speeding up from 3.2% in the prior six months.

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As a result, Wolseley trading profit was £254m for the third quarter, up 9.5% year-on-year.

Chief executive John Martin noted that “revenue growth in the quarter was good with US residential and commercial markets [were] growing well and industrial markets improving.” Indeed, Wolseley’s Stateside division again proved the group’s strongest performer, and like-for-like sales here jumped 8.5% in the period.

The Nordics moved back into growth, Martin added, although sales in the UK were broadly flat.

And Martin announced that sales have continued rising, commenting that “since the end of the period revenue growth has been broadly in line with the third quarter,” while noting that “gross margins and cost control have been good.”

The company said it therefore expects full-year results to meet current market expectations.

Strong and stable

Wolseley has made no secret that it expects North America to drive profits growth in the years ahead. Indeed, the plumber is about to take the symbolic step of rebranding itself as Ferguson after its US division in the coming months.

This optimism comes as little surprise as construction activity in the world’s largest economy remains robust. While latest data from the Commerce Department showed construction spending fell 1.4% month-on-month in April, the sector remains pretty strong.

Not only was March’s spending figure revised up to show growth of 1.1%, but the Commercial Construction Index released last week came out at 76 for the second quarter, up from 74 for the prior three months and indicating an improving outlook.

The City certainly believes Wolseley is on course to keep generating solid earnings growth, with analysts predicting rises of 20% and 8% for the years to July 2017 and 2018 respectively.

And such projections make it blistering value, in my opinion. Although a forward P/E ratio of 16.5 times nudges above the value benchmark of 15 times or below, a sub-1 PEG reading of 0.8 really suggests that Wolseley is hugely cheap relative to its growth prospects.

Toast this growth titan

A stable North American economy also bodes well for the earnings outlook at Diageo (LSE: DGE). The territory is the drinks giant’s largest single marketplace and is responsible for 37% of total revenues, and the London firm is doubling down on product investment  and  marketing spend to maximise returns from this expanding territory.

Diageo’s recent upward stride (the company’s share price hit fresh record peaks above £24 per share just today) leaves it looking pretty expensive on paper, the company sporting a prospective P/E ratio of 22.8 times.

But I believe the prospect of sustained profits growth, boosted by the benefits brought by sterling’s trek lower, fully justifies a premium rating.

The City has chalked in earnings rises of 18% and 8% in the years to June 2017 and 2018 respectively, and with the firm investing vast sums into market-leading labels like Johnnie Walker whisky and Captain Morgan rum, I reckon healthy growth can be expected long into the future.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Diageo. 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.

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