📉 Resilient Trader Trade Idea: The Renewable Diesel Re-Rating in Darling Ingredients (DAR)

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Resilient Trader is where smart traders come for vetted ideas.

Every week, we cut through the noise and surface opportunities that institutions are already eyeing - but with strategies tailored for retail traders. Today’s setup? A renewable fuels name that looks like it still has another leg higher as policy tailwinds and technical momentum start to line up.

We’ll cover:

• Why Darling Ingredients is a Buy at current levels

• How to take advantage with defined risk through a long call

🔍 Trade Thesis: DAR Is Sitting in the Sweet Spot of the Renewable Diesel Trade

Darling Ingredients (DAR) had a rough 2025 from an earnings standpoint. But we think the market is still too focused on the weak year that just ended and not focused enough on the stronger setup that may be forming now.

Behind the scenes:

🚨 RVOs came in strong: EPA finalized higher 2026 and 2027 biomass-based diesel and advanced biofuel obligations.

⛽ Renewable diesel tailwinds are building: Darling sits upstream in animal fats and used cooking oil, two critical feedstocks for renewable diesel.

📈 The chart is still strong: DAR is holding near 52-week highs after more than doubling off the lows.

📊 The Fundamentals Still Support a Higher Stock

Let's break it down:

💰 Revenue: $6.136B in 2025, up from $5.715B in 2024.

🧮 Adjusted EBITDA: $1.03B in 2025 despite a weak renewable diesel year.

🛢️ DGD volumes: 1.003B gallons sold in 2025 through Diamond Green Diesel.

🏭 Business mix: Feed Ingredients remains the core engine, while Fuel Ingredients gives DAR upside if renewable diesel margins improve.

💵 Cash generation: Operating cash flow is about $1.06B on a trailing basis.

📐 Valuation Still Leaves Room If Margins Recover

DAR does not look cheap on depressed trailing earnings. But that’s exactly why the opportunity exists.

⚖️ Forward P/E: 17.12x.

🏷️ EV/EBITDA: 18.10x, but that is based on trough-like renewable diesel economics.

📈 Bull case: If DGD margins normalize and feedstock demand stays firm, DAR can reasonably work into the $80 to $86 range, or about 30% to 40% upside from the $61.75 entry level.

🧭 Technicals Agree: This Chart Still Looks Strong

✅ Above key moving averages: DAR is above the 20-day, 50-day, 100-day, and 200-day averages.

✅ Current price: About $61.53 to $61.75.

✅ Resistance: $64.69 to $64.90 is the key breakout zone.

✅ Momentum: RSI is about 66.7, which is strong but not completely stretched.

🎯 Targets: $70 on breakout, then $80 to $86 if the thesis keeps playing out.

💥 Trade of the Week: Long Stock + Defined-Risk Call Option

We’re combining a bullish stock idea with a defined-risk options trade for traders who want more upside torque.

🟢 Trade Setup

• Buy $DAR ( ▼ 2.24% )  at $61.75

🛡️ Options Play

• Buy the Oct. 16, 2026 $70 Call for $5.30

• Buy Oct. 16, 2026 $70 Call: $5.30

• Strike price: $70

• Net debit: $5.30

📈 Risk-Reward

• Max Risk: $5.30 or $530 per contract

• Max Reward: Unlimited above breakeven

• Breakeven: $75.30

• Risk-Reward Ratio: Asymmetric upside if DAR breaks out and trends toward the low-to-mid $80s

🛑 Risk Management Tip

If you are buying the stock, watch the $58 to $59 area closely as near-term support. If you are buying the call, keep size small enough that a full premium loss does not damage your portfolio.

🚀 Catalysts on the Horizon

Keep your eyes on:

1. Stronger EPA volumes - Higher biomass-based diesel and advanced biofuel obligations should support feedstock demand.

2. Renewable diesel margin recovery - 2025 was weak for DGD, which sets up easier comparisons in 2026.

3. Analyst target increases - UBS raised its target to $78, Baird raised to $75, and JPMorgan raised to $69.

4. Technical breakout - A move through $64.90 could trigger another momentum leg higher.

🧠 Final Thoughts

DAR is a classic case of a stock that may still be underappreciated because investors are staring at backward-looking earnings while the forward setup improves.

From stronger Renewable Volume Obligations to renewable diesel tailwinds, elevated diesel pricing support, a cleaner leverage profile, and a bullish chart - this setup has all the ingredients for a profitable long.

✅ Buy DAR at $61.75
💸 Buy the Oct. 16, 2026 $70 Call for $5.30

We'll be watching this one closely.

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- The Resilient Trader