Trade of the Day: Technicals Signal a Bright Future for LSTR Stock

Landstar System, Inc. (LSTR) — LSTR stock jumped almost 2% on Friday as the broader market recovered from its early lows. With a number of positive signs on the chart, shares of this trucking company look like a good buy on a pullback or breakout.

When the company reported first-quarter earnings on April 21, it missed revenue estimates, but earnings of 69 cents per share beat expectations by 2 cents.

Following the earnings report, S&P Capital IQ Equity Research reiterated its “Strong Buy” rating and 12-month price target of $78 for LSTR stock despite trimming its 2017 EPS estimate. Its analysts now expect full-year earnings to decline 4.5% to $3.22 in 2016, but then rebound 11% to $3.58 in 2017.

Their positive outlook on Landstar is due in part to the belief that demand for the third-party logistics sector will continue to improve and that the company’s flexible asset-light business model gives it an advantage over its competition. Lower operating costs and low fuel prices are a bonus.

Capital IQ considers LSTR stock a good value, noting shares are supported by a buyback program in which Landstar repurchased 2.5 million shares last year.

Turning to the chart, LSTR stock made an all-time high above $80 in November 2014 before sinking 35% to just over $53 in January 2016. A triple-bottom was formed by the lows made in December and January and confirmed by buy signals from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR).

LSTR stock then rallied through its bearish resistance line and 50-day moving average in early February, and its 200-day moving average in March. In late April, LSTR confirmed its new uptrend with a new higher high and a golden cross (a long-term buy signal in which the 50-day moving average crosses up through the 200-day).

Buy LSTR stock on a pullback to $66 or on a break through its current top at about $68. My trading target is $78 for a potential gain of 15% to 18%.

LSTR Stock Chart
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