What Makes Hubbell (HUBB) a Quality Value Position?

Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. The market rallied in the quarter, as the recession fears waned, and market sentiment shifted toward increased risk-taking. The fund lost 0.22% in the quarter compared to the 5.35% gain for the Russell Midcap® Value Index. Stock selection led to most of the underperformance of the fund in the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Heartland Mid Cap Value Fund highlighted stocks such as Hubbell Incorporated (NYSE:HUBB). Headquartered in Shelton, Connecticut, Hubbell Incorporated (NYSE:HUBB) designs and manufactures electrical and utility solutions. The one-month return of Hubbell Incorporated (NYSE:HUBB) was 6.98%, and its shares gained 11.92% of their value over the last 52 weeks. On July 11, 2025, Hubbell Incorporated (NYSE:HUBB) stock closed at $419.24 per share with a market capitalization of $22.376 billion.

Heartland Mid Cap Value Fund stated the following regarding Hubbell Incorporated (NYSE:HUBB) in its second quarter 2025 investor letter:

"Industrials.  A new Quality Value position initiated during the quarter was Hubbell Incorporated (NYSE:HUBB , a leading electrical component manufacturer. Over the past decade, Hubbell implemented self-help actions to shift its portfolio away from traditional commercial construction end markets and toward the power grid/utility end market, which now represents more than two-thirds of sales, thereby reducing exposure to construction spending cycles. At the same time, Hubbell has simplified its product offerings and consolidated 15% of its footprint, rationalizing underutilized assets and creating flexible capacity for faster-growing markets.

During the pandemic-related supply chain disruptions, many of Hubbell’s utility customers over ordered products to ensure availability in the field. By 2024, as lead times normalized, destocking efforts accelerated and organic revenue turned negative. The stock came under further pressure in early 2025, as investor sentiment toward power generation demand took a hit.

As a result, the stock is now attractively priced in our opinion. After trading at a median 15% premium to its peers over the past 5 years and a 5% premium over the past decade, HUBB fell to a 10% discount in April and is now roughly in line with other Industrial companies on an EV/EBITDA basis. We also expect the company to benefit from continued demand for transmission and distribution infrastructure owing to the country’s aged electrical grid, and Q1-25 earnings confirmed our view that customer destocking has generally ceased. "

Hubbell Incorporated (NYSE:HUBB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Hubbell Incorporated (NYSE:HUBB) at the end of the first quarter, which was 38 in the previous quarter. In the first quarter, Hubbell Incorporated (NYSE:HUBB) reported $1.37 billion in revenue, down 2.4% year-over-year. While we acknowledge the potential of HUBB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Hubbell Incorporated (NYSE:HUBB) and shared the list of best electrical equipment stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.