Company Interview / The stock Ryan thinks has its building Blocks in place

Key bullet points:

Positive earnings momentum favouring Block (ASX:XYZ) and Hub24 (ASX:HUB)Hub24 capturing market share from Macquarie (ASX:MQG) with strong EBITDA marginsCochlear (ASX:COH) and Pro Medicus (ASX:PME) considered attractive post-sell down due to delayed, not lost, earningsPotential switch suggested: Sell Monadelphous (ASX:MND), buy Downer (ASX:DOW) for better value and recurring revenue

Ryan McCaugherty of Sandstone Insights highlights the importance of rebalancing portfolios post-reporting season, with empirical evidence suggesting that companies exceeding earnings expectations and upgrading guidance tend to outperform. McCaugherty singles out Block (ASX:XYZ) as a strong contender, citing its organisational restructuring, leadership changes with Nick Molnar at the helm, and renewed momentum in Cash App user growth. Block’s streamlined workforce and accelerated product release schedule, aided by AI, are viewed as drivers of increased profitability and potential top-line growth.

Turning attention to Hub24 (ASX:HUB), McCaugherty notes its consistent ranking among top adviser platforms and the ongoing shift towards managed accounts that is boosting inflows. He suggests Hub24 is capturing market share from competitors, particularly Macquarie (ASX:MQG), and highlights the firm’s robust EBITDA margin and significant operating leverage, reinforcing its strong position amid structural tailwinds in the sector.

Within healthcare, McCaugherty points to Cochlear (ASX:COH) and Pro Medicus (ASX:PME) as companies punished for timing delays, rather than deteriorating fundamentals. He argues such dislocations offer buying opportunities, especially as Cochlear benefits from a product upgrade cycle and Pro Medicus continues to expand its addressable market. McCaugherty also sees an opportunity in switching from Monadelphous (ASX:MND) to Downer (ASX:DOW) , citing valuation mismatches and differing revenue structures.