The NEXT company in my ongoing series of the Top 25 stocks for the NEXT 25 Years is Darling International, Inc. (AMEX: DAR). Darling is headquartered in Irving, Texas, and has a current market capitalization of $715 million. The stock is trading at around $8.90 and has a daily average trading volume of 800,000 shares. The company does not play in a glamorous industry as its name would imply, but it does operate in a growing, vital industry.
Darling provides recovery, rendering, and recycling services and solutions to the food and restaurant industry. The rendering division collects and processes animal by-products including the hides from grocery stores, poultry and meat processors, and butcher shops. It processes these by-products into reusable proteins and oils sold to leather and oleo-chemical producers.
The restaurant services division collects used cooking oil from food services providers, including cafeterias and restaurants, and recycles these oils into industrial oils and high-energy animal feed. The division also manufactures grease-traps used by high-volume food preparers and restaurants. The businesses as I said are not glamorous, but certainly critical as industry handles its waste products more efficiently and profitably.
Darling conducts its operation at 44 different processing sites and offers full transportation services to the facilities. Darling offers its customers the training and/or the outsourcing of the kitchen grease-by-products. State regulations have become tougher on food service operators to manage their grease problems more effectively. Darling has the facilities strategically located around the United States to serve almost every major metropolitan market as well as train its customer-base to be in full compliance.
The recycling and rendering businesses are growth industries in the United States and the rest of the world is following suit. The re-use of valuable oils and animal by-products are becoming more important as Darling's technologies and economies of scale offer profitability to its customers. I estimate that Darling will generate revenues of $545 million and earnings per share of $.40 for 2007.
My 2008 estimates call for revenues of $600 million and earnings per share of $.50. The company is clearly on a growth trajectory and the industry has high barriers to entry. Capital costs to build facilities is high, but Darling has done all the heavy lifting.
It may not be glamorous, but Darling does it better than any other company in the sector.
Georges Yared is the CIO of Yared Investment Research.
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Reader Comments (Page 1 of 1)
8-06-2007 @ 7:40PM
lynda quadland said...
rock on
8-06-2007 @ 7:40PM
lynda quadland said...
rock on