Darling International Inc.
“Its name doesn’t quite fit its business, but it best describes its stock.”
As long as you don’t think about what Darling International Inc. (NYSE:DAR) actually does, you should be very comfortable with the stock. Despite the company’s greasy business, its financials are squeaky clean. In the most recent quarter, DAR posted a 170% increase in sales, and earnings more than doubled.
Darling’s boost in sales and profits is primarily attributed to the acquisition of Griffin Industries in December 2010, as well as higher selling prices of finished products — a great way to make money.
Now, the company recently decreased forward guidance and it took a chunk out of the stock price, but for me, that’s what makes it a compelling buy under $18 for the long term.
“A classic low-priced stock.”
Darling and I go way back — so far back that I devoted the first chapter of my new book, The Little Book of Big Profits from Small Stocks, to the stock. It proved to be a doubler for me many years ago, and it’s once again on my radar screen.
The rendering and collection company’s most recent earnings report did miss estimates, but the reasons for the miss should be confined to the third quarter, so I’m not concerned.
Darling has a lot going for it, including an attractive valuation, continued growth from mergers and tight crop supplies bumping up prices for some of its key products.
DAR stock is now trading for a steal and is on its way back to its September $17 pricing.