Trade-Ideas LLC identified Darling Ingredients ( DAR) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Darling Ingredients as such a stock due to the following factors:

  • DAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.2 million.
  • DAR has traded 1.9 million shares today.
  • DAR traded in a range 243.4% of the normal price range with a price range of $0.87.
  • DAR traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on DAR:

Darling Ingredients Inc. develops, produces, and sells natural ingredients from edible and inedible bio-nutrients worldwide. It operates in three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients. DAR has a PE ratio of 3. Currently there are 4 analysts that rate Darling Ingredients a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Darling Ingredients has been 1.8 million shares per day over the past 30 days. Darling Ingredients has a market cap of $2.4 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.59 and a short float of 4.7% with 3.26 days to cover. Shares are up 37.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Darling Ingredients as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • DARLING INGREDIENTS INC has improved earnings per share by 23.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DARLING INGREDIENTS INC increased its bottom line by earning $0.48 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.48).
  • After a year of stock price fluctuations, the net result is that DAR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The gross profit margin for DARLING INGREDIENTS INC is rather low; currently it is at 22.20%. Regardless of DAR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DAR's net profit margin of 10.42% compares favorably to the industry average.
  • The debt-to-equity ratio of 1.05 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, DAR's quick ratio is somewhat strong at 1.22, demonstrating the ability to handle short-term liquidity needs.

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