It was all fun and games when WallStrip and AlphaTrends jumped on the Landstar bandwagon. Now that the company is profiled in BusinessWeek I’m getting a little worried.

Landstar: Trucking Ahead

We think Landstar System (LSTR; recent price, 53), a non-asset-based transportation company, has an extremely flexible strategy that limits its exposure to economic downturns while allowing it to rapidly ramp up operations when the economy improves. We think this model reduces balance sheet risk by limiting necessary investments in physical assets such as trucks and other equipment, but also allows the company to rapidly scale up operations during periods of economic strength and strong transportation demand.

In our view, the company is well positioned to benefit from any strengthening in the U.S. economy in the latter half of the year. Even if the U.S. economy does not start to strengthen, we expect Landstar to increase revenues and earnings on market share gains, additional penetration into existing customer accounts, and growth of a new revenue stream from its recently started warehousing business.

We believe Landstar stock is likely to show an expansion in its price-earnings (p-e) ratio on improvement in the U.S. economy. Also, we think Landstar should be able to close the discount it trades at compared to peers as it expands its use of brokers, and increases its penetration into the intermodal business.

The stock carries Standard & Poor’s highest investment recommendation of 5 STARS (strong buy).

There is nothing wrong with the analysis, and don’t get me wrong - I still like the long-term prospects for Landstar and am willing to own it up to a Treasury-par free cash flow yield. Its just that all the attention may signal a short term top.

Disclosure: At time of publication, William Trent has a covered call position in shares of Landstar (LSTR - Annual Report).