Darling Ingredients Inc. (DAR)

The company collects waste from meat plants and restaurants — bones, fat, used cooking oil — and converts it into feed proteins, gelatine and biofuel feedstock. The raw material comes cheap, and sometimes the company is paid to take it: disposing of it otherwise costs more.

The central story is a renewable diesel joint venture, where processed fat becomes fuel. Its economics rest on government incentives, and a change to them shifts profitability faster than any market factor. Risks: fat and protein prices, biofuel regulation and slaughter volumes. A separate and steadier line is collagen and gelatine for food and pharmaceutical use, where price does not depend on fuel incentives. The company pays no dividend.