When a legendary investor like George Soros takes a large position in a stock like electrical products manufacturer Hubbell Incorporated (NYSE:HUB-B), it's usually a good idea to take notice. So why is George Soros buying stock in Hubbell Incorporated, and should you be buying too?

Soros Fund Management buys Hubbell Incorporated stock
A look at SEC filings from Soros Fund Management reveals that his investment firm had picked up 306,371 shares by the end of June, and another 311,985 shares by the end of September. At the current price of around $107, the position is worth around $66 million -- a pretty significant position.

Introducing Hubbell Incorporated
Hubbell generates more than 80% of its sales from the US and has two operating segments: The electrical segment contains an electrical systems division (wiring devices and products) and a lighting products division (indoor and outdoor lighting). The power systems segment sells products and components to utilities.

As such, its key end market is non-residential construction, and to a lesser extent the industrial and utility markets. Its residential construction sales are growing the fastest (with high single-digit growth forecast for 2015), but are a relatively small part of its sales. 

Hub
Source: Hubbell Incorporated Presentations

Four reasons why Soros might have bought
First, there are signs that the non-residential construction market is set for good growth in 2015, with the architectural billings index (a widely followed indicator of future growth) picking up in recent months. A reading above 50 indicates growth, and readers can see that all three components are now in positive territory, which is good news for Hubbell's electrical system and lighting solutions.

Hubbell
Source: American Institute of Architects

Furthermore, Hubbell's rival, Acuity Brands (NYSE:AYI), recently gave a bullish forecast for the lighting market in North America. Quoting from its most recent earnings release, in October, CEO, Vernon Nagel outlined:

Third-party forecasts as well as key leading indicators suggest that the growth rate for the North American lighting market... ... will be in the mid-to-upper single digit range for fiscal 2015 with expectations that overall demand in our end markets will continue to experience solid growth over the next several years.

Second, Hubbell has a growth opportunity from the secular shift toward using LED lighting. As the linked article argues, companies like Cree (NASDAQ:CREE) and Acuity Brands are seeing strong growth in LED lighting sales. LED luminaires now make up 40% of Acuity's total sales, with LED product sales almost doubling in its most recent quarter.  Cree is a company better known for being an LED manufacturer, but its lighting products contributed 52% of revenue and 41% of gross profit in its recent third-quarter. Moreover, lighting products revenue grew at 51%--there is no doubt that lighting is leading the next wave of LED growth.

Third, Hubbell is a well run company that is currently converting around 10% of sales into free-cash flow and has historically generated a return on equity in the high-teens

Fourth, according to a Reuters article, a trustee of family trusts that own significant amounts of the voting power in the stock (the Class A shares have 20 times the voting power of Class B) is considering its options

Clearly, if the family trust does sell out, it would make the company more attractive to a potential bidder--although at this stage it's just speculation.

What's next for Hubbell Incorporated?
All told, the stock remains a good way to play a recovery in the non-residential construction market in the US, and the long-term LED lighting story remains compelling. Throw in the possibility of the company becoming a more viable takeover target, and it's not hard to see why Soros Fund Management might like the stock.

With a P/E of almost 17 times forward estimates, the stock doesn't look expensive, and given the track record of George Soros, it's a good idea for investors to look closely at the stock.

Lee Samaha has no position in any stocks mentioned. The Motley Fool recommends Emerson Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.