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Darling International Could Soon Be Rendering Profit Spike
The World of Waste is Turning Green....As in Profit
by Robb Hoff
August 24, 2012
Just how much the impact of severe, if not historic, drought will have upon the use of corn in the near future is no doubt going to make or break some small and not so small fortunes through the futures market.
But outside of wagering directly through futures, there may be some alternatives out there that could add a jolt to a portfolio soon if the drought impact on corn production remains as bad as it looks like it will be.
The one company that has recently piqued my interest considerably is Darling International (DAR), which made a key acquisition of Kentucky-based Griffin Industries last year and looks poised to emerge as the industry leader in rendering animal waste tissue and by-product into recycled material that adds to livestock feed among many other non-ingested products including bio fuels.
I have to admit that the drought impact on corn production and its potential to ultimately force increases in livestock feed prices is what drew me to Darling International for a quick double-digit percentage return.
But now I'm not so sure this stock isn't a keeper, partly because of the scope of its rendering and recovery operations across a big chunk of the country now, but also because of some unexpected surprises about their enterprise into the bio fuels industry.
The joint venture between Oil & Gas refinery Valero Energy Corporation and Darling is expected to go online in 2013 for a sample production run of rendered-based bio fuel that could make significant strides for an alternative production of jet fuel and soy-based bio-diesel.
If all goes well for Darling in the long-term, this stock could be the kind of ringer that yields a monstrous return some 20 years down the line.
But even in the short-term, the impact of corn prices for feed should help boost Darling beyond its current level of less than $17 a share, especially once the spike in feeding what we eat starts to feel like we're getting rendered at the grocery store.