It's getting harder and harder to find good value stocks in the market right now, but there are still pockets of value if you look hard enough. In such circumstances, it makes sense to look at some unloved and underappreciated stocks. In this vein, I think outboard motor and boat company Brunswick, paint and coatings manufacturer Axalta Coating Systems, and electrical equipment company Hubbell Incorporated are stocks worth buying right now. Here's why.

Keyboard with Buy Stock button.

Image source: Getty Images.

Value and growth

Let's start by looking at valuations and near-term growth prospects.

In common with many other companies, all three are expected to see a snapback in revenue growth in 2021, and the good news is that 2022 is expected to see mid-single-digit growth too.

Estimated revenue growth for Hubbell, Brunswick, and Axalta

Data source: marketscreener.com

Turning to valuation matters, the table below shows each company's price-to-free cash flow (FCF) multiple based on Wall Street analysis and the current market price. It's a good idea to look beyond 2020 for earnings/FCF-based valuations for two reasons. First, the COVID-19 pandemic has obviously affected revenues. Second, FCF can sometimes receive a boost in downturns as companies stop ordering products and focus on running down existing inventory.

Focusing on the 2021 valuation numbers shows a snapshot of three companies trading on very favorable valuations and with mid-single-digit revenue growth prospects ahead of them.

Price to free cash flow

2020Est

2021Est

2022Est

Hubbell Incorporated (NYSE:HUBB)

15.4x

16.9x

16.1x

Brunswick (NYSE:BC)

10.3x

16.2x

13.1x

Axalta Coatings (NYSE:AXTA)

18.5x

15.3x

13.4x

Data source: marketscreener.com, author's analysis.

Brunswick

This company has transformed itself in recent years. Its Life Fitness exercise equipment business was sold in 2019, and the growth of its propulsion (outboard motors) and aftermarket parts and accessories sales mean it's a lot less reliant on boat sales these days. In fact, earnings from propulsion and parts and accessories now dwarf earnings from boat sales. That's good news because it means the business is a lot less cyclical.

That said, boat sales are obviously a key factor in facilitating the other segments' sales growth. To that end, Brunswick's boat sales are recovering strongly from the pandemic (up 18% in the third quarter) and management believes the lockdown measures have encouraged a new generation of consumers to take up boating. Indeed, around half of Brunswick's post-pandemic boat custom is coming from purchasers classed as first-time or lapsed buyers.

A boat.

Image source: Getty Images.

It all adds up to a company that's de-risked its earnings by reducing its cyclicality and now has good long-term earnings potential due to a favorable environment for boating.

Axalta Coating Systems

A recovering automotive production market and a return to cars on the road should lead to a pickup in growth at Axalta in 2021 and beyond. The paint and coatings company has heavy exposure to the automotive refinish and original equipment markets, and as you can see in the first chart above, Axalta has very good revenue growth prospects in 2021 as the recovery takes shape.

That said, investors shouldn't overlook the long-term potential here. After all, the company's automotive refinish revenue is a function of road collisions, which in turn are a function of miles driven.

Moreover, the paint and coatings industry overall -- Axalta also has significant industrial-based revenue -- has a relatively safe position within its end markets. Transportation and industrial products will always need painting and coating, so it's reasonable to expect Axalta's revenue to grow in line with growth in the industrial economy.

Hubbell

The company's collection of electrical and power systems equipment doesn't make it the sexiest stock on the market. However, bread-and-butter companies are likely to do well when baking is in fashion. In this case, Hubbell is set for good ongoing demand from spending on power transmission and distribution, and also from utilities spending on digital technologies.

Wind turbines.

Renewable energy requires investment in transmission and distribution. Image source: Getty Images.

There are a few main reasons for this:

  • Growth in demand for renewable energy is leading to renewed investment in transmission and distribution.
  • Utilities are investing in digital technologies and modernizing their grids with smart solutions.
  • Utilities are investing in smart metering and communications solutions in order to improve efficiency.

As such, Hubbell's utility solutions revenue rose 1% in the third quarter but failed to offset broad-based weakness in the electrical segment (a revenue decline of 14%), resulting in an overall sales decline of 8%. However, a combination of ongoing strength in the transmission and distribution market and a recovery in the industrial economy is expected to lead to mid-single-digit revenue growth in 2021 and beyond.

HUBB Price to Free Cash Flow Chart

Data by YCharts

Meanwhile, the stock continues to trade at a significant valuation discount to its closest peer, Eaton Corp. All told, Hubbell's combination of attractive absolute and relative valuation, recovery prospects, and excellent FCF generation make it a stock worth buying in 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.