1. Darling Ingredients Inc. (NYSE:DAR)
Potential Upside: 57.06%
Number of Hedge Funds Holders: 40
Darling Ingredients Inc. (NYSE:DAR) is a global company operating in the bio-nutrient solutions and the renewable energy sector. Its operations span across three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients.
The company reported net sales of $1.4 billion for Q4 ended December 28, 2024, while net income surged to $101.9 million, or $0.63 per diluted share, up from $84.5 million in the previous year. However, operating income declined, down to $122.4 million, mainly due to decreased fat prices. The net sales for the full year were $5.7 billion, while net income stood at $278.9 million. Accordingly, Darling Ingredients Inc. (NYSE:DAR) was able to repay a debt of $353 million to increase its financial stability.
Moreover, the Diamond Green Diesel joint venture’s strong performance was one of the main takeaways for 2024, generating $179.8 million in cash dividends for Darling Ingredients for the year. The company also successfully launched the world’s largest sustainable aviation fuel unit, enhancing its position in the renewable energy sector. Furthermore, Darling Ingredients Inc. (NYSE:DAR) has identified opportunities from the 45Z clean fuel production tax credit, which is expected to provide stability for the monetization of renewable fuel incentives.
Darling Ingredients Inc. (NYSE:DAR) was also able to improve margins across its business segments, with its feed ingredients segments’ gross margin increasing from 21.5% in Q3 to 22.6% in Q4. This improvement was made possible due to stabilized rendering volumes and enhanced waste fat recovery. On the other hand, the food ingredients segment also saw betterment in terms of gross margins, which rose from 23.9% to 25.7%. This was supplemented by higher sales and increasing demand for collagen-based products such as Nextiva.
Looking ahead, Darling Ingredients Inc. (NYSE:DAR) partnered with GreenGasUSA to launch its first project into running for renewable natural gas at its Dublin, GA, facility. This initiative looks to convert biogas from wastewater streams into pipeline-quality RNG, resulting in a reduction in emissions while introducing an additional income stream. Thus, the company is committed to expanding similar projects to reinforce its purpose of sustainable growth, making it to our list of the Best Future Food Stocks to Buy.
Overall, Darling Ingredients Inc. (NYSE:DAR) ranks first on our list of the 7 Best Future Food Stocks to Buy According to Analysts. While we acknowledge the potential of DAR, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DAR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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