In August, I argued that Biodiesel stocks could be in trouble from more efficient ways to turn the oils and fats they use as feedstock into fuel, and concluded the article by saying that the likely winners are suppliers of oils and fats, not the processors. James Kingsdale of Energy Investment Strategies has been thinking along the same lines. Last week he wrote an excellent overview of the major biofuels industries, including some stock picks.
One of those stock picks was the diamond in the rough I wish I had known about when I wrote Biodiesel's Nightmare: Renewable Diesel back in August. James writes:
Darling International, Inc. (NYSE:DAR) ... is a renderer and a collector of waste greases. Renderers collect waste fat and bones from meat producers and turn them into products. Both waste greases and animal fats are potential high FFA biodiesel feedstocks, although Darling presently is not using them for that purpose...
While biodiesel from palm oil is causing deforestation, and the prices of vegetable oils rise because farmers are changing their crop rotations to produce more corn for ethanol, biodiesel (or renewable/green diesel) from waste vegetable oil has a positive environmental impact because it diverts something that would otherwise have to be disposed of to a useful purpose.
Biodiesel from waste vegetable oil is the greenest biofuel available. As a member of the Denver Biodiesel Coop, I use it in my car... now I can use it in my portfolio as well.
DISCLOSURE: Tom Konrad and/or his clients do not have positions in any of the companies mentioned here.