DARLING INTERNATIONAL,INC (DAR)

Sector: Consumer Goods

Industry: Cleaning Products

Full Time Employees: 3,330

With commodity prices still on the rise and planting season just about underway, now seems like a good time for a food Industry selection. However, this one has a twist. Not a conventional restaurant of food producer, but one that that provides recycled and recovery solutions into the food industry. The stock pick is Darling International, Inc.

COMPANY INVEST PROFILE: DAR

Darling International Inc. provides solutions to the food industry worldwide. It operates in two segments, Rendering and Restaurant Services. The Rendering segment engages in collecting and processing animal by-products and converting these into useable oils and proteins utilized by the agricultural, leather, and oleo-chemical industries. This segment offers various products, such as meat and bone meal, and bleachable fancy tallow. The Restaurant Services segment involves in the collection of used cooking oils from food service establishments and recycling them into similar products, such as high-energy animal feed ingredients and industrial oils. This segment provides grease trap servicing; and schedules services, such as fat and bone, and used cooking oil collection, as well as trap cleaning services for contracted customers. The company primarily sells its products to producers of oleo-chemicals, soaps, pet foods, leather goods, livestock feed, and bio-fuels through commodities brokers, company agents, and directly.

FUNDAMENTAL ANALYSIS TIDBITS

FWD PE:  12.17
Qtrly Revenue Growth (yoy): 51.90%
Beta:  1.83

TECHNICAL ANALYSIS FOR DAR

Even though this stock has made quite a bullish move over the past year, it looks like now could be an opportune time for another 20% move higher.

Looking at the chart, we’ll begin the technical analysis for DAR with the ADX momentum indicator. Basic buy signals on this indicator occur when the green line +DI crosses the red line –DI to the upside. However, there is another component to this buy signal. It must be confirmed with a close above the extreme high point of the day of the cross. The cross occurred on Monday, 3/21. Confirmation of that cross took place on 3/23. It is now a confirmed buy signal.

The daily candlestick chart of DAR, although entering some resistance, has produced at “golden cross” of the 13 day Exponential Moving Average (EMA), up through the 23 day EMA. This EMA combination produces wonderful buy and sell signals when the faster moving average (red) crosses up of down through the slower EMA (green). At Company Invest, we think this move could produce a run up to the 17.55 area or so, which would be over a 20% move.

The volume bars are showing more buyers than sellers, which is confirming the other buy signals. The gray bars on up days since March 1 are taller then the red bars from down days. This show that there is buying conviction in DAR right now.

Technical analysis for DAR concludes with a look at the MACD indicator. The MACD line just got a bullish cross up through the signal line today, putting it in line with the bullish ADX and EMA signals mentioned earlier. Additionally, the MACD histogram entered positive territory for the first time since February. The MACD histogram is a wonderful leading indicator.

Bottom Line: Hope for a gap down opening on Friday morning and buy DAR on the dip. Start with a small position and a tight stop, below the 50 day moving average at around $13.48.