These popular stocks have been punished by the market - is now the time to buy?

In the last fortnight I've been reminded that stocks often 'take the escalator up and the elevator down' as two of my favourite smaller companies NCC Group (LSE: NCC) and GB Group (LSE: GBG) have seen their share prices battered after recent announcements.

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Have the share price falls have created buying opportunities or is it time to run for cover?

NCC Group

After rising from 200p to 370p in the last 18 months, NCC Group's share price plummeted back to the 200p level recently on the back of its four-month trading announcement this month.

The company warned of setbacks including the cancellation of three major contracts and difficulties with services contract renewals. Management said the cancellations were unrelated and that profit expectations for the year remained "in line with the board's expectations." However, the market clearly wasn't convinced and NCC's share price fell 35% in the blink of an eye.

After several years of strong revenue and earnings growth, there's no doubt NCC Group was priced for perfection.

Revenues had grown from £88m in FY2012 to £209m in FY2016, CAGR of a stunning 24%, and as a result, at a share price of 370p, NCC Group was trading on a lofty P/E ratio of 32 times FY2016 earnings. That left little room for error and after warning of setbacks, sentiment towards the company has clearly deteriorated.

As a shareholder, it's extremely frustrating to see NCC Group fall 45%, however I believe there's a lot more to come from the cyber security specialist over the long term and as such, I won't be selling my shares.

One thing I've learnt from investing in smaller companies than the FTSE giants is that the ride often isn't smooth. Growth can be lumpy and acquisitions can take time to integrate.

However NCC Group is operating in a fast growing industry and I believe the fundamental outlook for the company remains strong.

Group revenues for the four months increased by 36% to £79.6m including organic growth of 21% and forward order books and renewals stood at £108.8m, up from £71.9m this time last year.

With city analysts forecasting earnings per share of 12.8p for FY2017, NCC's forecast P/E ratio is now just 15.6 which I believe is a steal for a company with NCC's growth prospects.

GB Group

It's a similar story at identity specialist GB Group, with the company's share price falling around 30% on the back of its recent trading update.

GB announced revenue growth of 16% for the six months ended 30 September, but also spoke of delays in the key GOV.UK Verify project and that, along with uncertainty related to a new CEO coming on board next year, was enough to send the share price spiralling downwards.

At a share price of 350p, GB was trading on a high P/E ratio of 33, however after the price fall, the P/E ratio has dropped to 23.6. This could be seen as a little high still, but it's not outrageous for a company with revenue CAGR of 23% over the last four years.

With management stressing that the market for identity data intelligence products remains "compelling" and that the board "remains confident in the outlook for the full year," I believe the share price fall may have created an opportunity to pick up this fast-growing company at a more attractive price.

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Edward Sheldon owns shares in NCC Group. The Motley Fool UK owns shares of NCC. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.