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Is this small-cap growth stock a falling knife to catch after crashing over 20% today?

Today’s capitulation in the share price of logistics solutions, e-fulfilment and returns management services provider Clipper Logistics (LSE: CLG) is another reminder of just how quickly investor sentiment can change, particularly when related to highly-rated small-cap companies. 

Down over 20% in early trading following the release of its latest set of full-year results, Clipper’s valuation hasn’t been this low since October 2016.

As long as investors can see beyond today’s fall, however, I think this might prove a good opportunity to acquire a slice of what remains a promising growth story.

Decent results but… 

Revenue (£400.1m) and profit (£14.3m) increased 17.6% and 14.6% respectively in the 12 months to the end of April. That’s hardly shabby. Nor was the 16.7% increase to the dividend.

Over the year, the Leeds-based business began new contracts with retailers such as M&S and ASOS as well experiencing “significant growth in activity” with many of those already signed up to its services, including Asda and Morrisons. In line with its strategy of expanding further into European markets, the company also won three new contracts in Poland and will open a second facility to accommodate one of these later in 2018. Factor-in two “immediately earnings-enhancing” acquisitions (RepairTech and Tesam Distribution) and a brand new agreement with Boohoo-owned Pretty Little Thing and it’s hardly tin hat time.

No, today’s dramatic fall might have been prompted by Executive Chairman Steve Parkin’s comment that the company has been required to bring “an element on caution” into its planning as a result of ongoing problems in the retail sector. With trading on the high street continuing to be sluggish, not helped by wider political and economic uncertainty, this seems eminently sensible.

The only problem is that Clipper’s rich valuation relative to industry peers means that any chinks in its outlook will always be punished. Even after taking into account today’s fall, earnings per share of 14.2p for the last year leaves the stock trading on a seriously high trailing P/E of 28.

While I’d wait for things to calm, I certainly don’t think there’s anything fundamentally wrong with Clipper as a business. Having sold my stake for a decent profit some time ago, the company is back on my watchlist.

For those unnerved by today’s fall, however, there are lot of other opportunities out there.

Guidance unchanged

I’ve been positive on £1.7bn cap meats provider Cranswick (LSE: CWK) for quite a while now. Although the shares have been fairly volatile so far this year, I’m still finding it tough to come up with reasons why this shouldn’t be a long-term hold for growth hunters.

Today’s Q1 statement — covering the three-month period to the end of June — was reassuringly surprise-free. With revenue up 3.2% compared to the same period in 2018 and the contribution from exports “modestly ahead“, guidance for the full year was unchanged.

At 22 times forecast earnings for the year, Cranswick’s stock isn’t cheap and perhaps explains the rather lacklustre market reaction to these numbers.

That said, a rock-solid balance sheet (£8m net cash), consistently growing dividends and masses of potential overseas can’t be ignored. Once up and running, a newly-commissioned continental products factory — along with a separate poultry primary processing facility — will also add substantial capacity to support the company’s growth strategy going forward. I remain a fan.

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Paul Summers has no position in any of the 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.