Forget Tariffs, Landstar and West Fraser Can Still Rally

Key Points

• As the market prices in slowdowns in the transportation and housing sectors, these two stocks have fallen well below their 52-week highs.
• Opportunities hidden inside the business models for these companies create a massive upside gap in the coming months.
• Wall Street analysts remain bullish along with institutions, calling for double-digit upside.

All stocks in the transportation sector suffer from the same epidemic in the United States; the price pressures from trade tariffs are slowing down the business activity in this industry for logical reasons, but that doesn’t mean all stocks in the space should be ignored today.

A specific combination and loophole in this entire situation creates two buying opportunities for investors who are bold enough (and have the stomach) to be contrarians.

For the transportation sector, specifically trucking, investors should watch for shares of Landstar Systems Inc. NASDAQ: LSTR and West Fraser Timber Co. NYSE: WFG. However, before the individual factors drive the upside present in these two companies, investors should first understand what the industry setup looks like today and where the mispricing opportunity comes from.

A rare mix of slowing activity and price increases has taken trucking; at the same time, trade tariffs have created a tailwind for Canadian timber imports. That being said, it makes sense to see markets react by sending stocks like Landstar and West Fraser lower, though there is one element of surprise in each of these companies that can bring them into higher prices.

Why Markets Discount Landstar and West Fraser

Inside the services PMI index, investors will see executive commentaries expressing their concerns for the trucking industry. These comments suggest that the space is in worse shape than the 2008 financial crisis, which explains why Landstar stock has been discounted to a low of 64% of its 52-week high today.

As business activity slows down and prices continue to rise for shipping and products, it is understandable to observe this dynamic today. This has created a significant earnings per share (EPS) headwind that is now being reflected in stocks like Landstar. However, there is one reason the stock is a buy today, which will become clear in a minute.

For West Fraser, the American housing market is the problem. Building permits have been on a decline for the past few quarters, and mortgage applications have also declined, creating less demand for new residential construction and thus trickling into less demand for building products (like Canadian timber).

That being said, a few homebuilders in the United States have been rallying recently, suggesting that the recent interest rate cuts by the Federal Reserve will positively impact demand. West Fraser now trades at 71% of its 52-week high as it prices in the housing slowdown and the tariffs on Canadian goods.

This is where investors can flip the script and profit in the coming months.

Landstar Has a Secret Ace Up Its Sleeve

Not many investors are aware that Landstar is not only a trucking company but also offers software nationwide to organize and optimize its logistics network and that of other major players in the space. Considering that volume is slowing while prices rise, efficiency becomes a priority for trucking companies, and that’s where Landstar wins.

In fact, a simple financial ratio measuring capacity (sales divided by total assets) suggests Landstar is now operating at 280% of its baseline capacity. The industry average is roughly 75.8%, which means Landstar is not oversubscribed on the trucking side but rather on the software side.

This explains why Wall Street analysts still carry a consensus price target of $145.17 for Landstar stock, implying 16.8% upside from where it trades today. This view could be boosted higher if momentum returned to the stock. More than this higher ceiling potential, some savvy investors in the institutional space have already acted on this view.

Those from Boston Partners boosted their Landstar holdings by 14.2% as of August 2025, bringing their net position to a high of $197.3 million or 4% ownership in the entire company. Fundamentally, the stars are aligned for investors to profit from this misunderstood trade with an EPS growth consensus of 21% through the end of 2025.

West Fraser Can Bring an EPS Surprise

Everyone knows that the trade between Canada and the United States is becoming increasingly challenging, exacerbated by the housing slowdown. However, in the company’s latest quarterly press release, investors will notice management mentions the Section 232 clause for Canadian imports as a hidden opportunity.

This article aims to protect national security in the United States regarding domestic labor and production. However, its most recent version has been narrowed down to metals like aluminum and steel.

In that sense, Section 232 does create a mispricing opportunity as markets placed a bearish filter on West Fraser’s imports.

Suppose interest rate cuts have a bullish impact on the housing market, and timber comes into high demand again. In that case, markets may be in for a surprise in West Fraser's earnings, especially if the narrowing of this Section 232 article helps with timber imports into the United States.

Wall Street analysts have a consensus price target of $100 per share, which is 40.7% above today’s compressed prices. Considering this situation, the risk-to-reward ratio significantly favors the buyers today, as recent trading activity shows.

Over the past month, 1.2% of West Fraser’s short interest declined to show potential bearish capitulation as short sellers realize minimal downside at this price compared to where the stock could jump on this tariff loophole.