2 Non-AI Giants to Buy on Solid Guidance and Lucrative Valuation

Centene raised 2026 adjusted EPS guidance to above $4.80 from above $3.40 and lifted total revenue guidance to $193.5-$197.5 billion; its shares are up 68.7% year to date and trade at a 13.58x forward P/E. Archer-Daniels-Midland increased 2026 adjusted EPS guidance to $5.15-$5.60 from $4.15-$4.70, citing improved crushing and ethanol conditions, renewable-fuel obligations, trade dynamics and higher energy prices. ADM shares have gained 50.4% year to date, while consensus current-year EPS estimates rose 8.5% over 60 days; Centene's rose 40.9%.

Analysis

CNC is the cleaner idiosyncratic setup, but the earnings reset is principally a medical-cost and execution normalization story rather than durable top-line growth. With revenue essentially flat, incremental EPS credibility hinges on maintaining the medical-benefit-ratio range while reducing administrative intensity; a 50-100 bp adverse medical-cost variance would materially impair the implied margin recovery. The 1-3 month catalyst path is quarterly utilization and Medicaid-rate commentary, while the 6-18 month upside requires state reimbursement to keep pace with acuity and redetermination-related membership mix.

ADM's upgraded outlook has more macro beta than the headline valuation suggests. Crushing and ethanol margins are highly sensitive to policy implementation, feedstock spreads, export flows and energy prices; the revised earnings power should benefit other biofuel-chain exposures including BG and GPRE, while potentially raising input-cost pressure for livestock and food processors such as TSN. The market may be underpricing the possibility that renewable-fuel economics shift profit pools from grain merchants toward domestic crushers and ethanol producers, but ADM's premium to its industry multiple leaves less room for any delay in regulatory realization.

Contrarian view: both equities have already rerated sharply, so further gains require estimate delivery rather than another multiple expansion. CNC offers a more defensible earnings-revision trade because consensus still appears anchored to a transition-year framework, whereas ADM's guidance embeds several externally determined assumptions. For ADM, a weaker energy complex, narrower crush spreads, or trade-policy disruption can reverse the earnings revision cycle within weeks; for CNC, unfavorable utilization or a state-rate lag is more likely to emerge over one to two reporting periods.

Key Decisions for Investors

• Initiate a 3-6 month long CNC / short UNH pair, sized beta-neutral: CNC has greater operating-leverage upside if medical-cost normalization holds, while the short offsets managed-care policy and utilization risk. Target 10-15% relative outperformance; exit if CNC's reported medical-benefit ratio exceeds the high end of its guided range or management reduces the EPS floor.
• Accumulate CNC only on post-results volatility rather than chase momentum; use a 7-10% drawdown entry window. The risk/reward is favorable if next-quarter medical-cost trends validate the margin bridge, but cap exposure ahead of utilization-sensitive earnings releases.
• Maintain ADM as a tactical 1-3 month long only if weekly crush margins, ethanol margins and RIN values remain constructive; pair with short BG to isolate potential U.S. renewable-fuel and domestic-processing advantage. Target 8-12% ADM upside versus 5-7% downside; close on sustained margin deterioration or evidence of delayed/modified renewable-fuel implementation.
• Do not underwrite ADM on a standalone valuation discount: set an alert for a material decline in crude oil or ethanol margins and reassess before the next earnings report. If those indicators weaken, switch from outright long to selling upside calls against any residual position.