Overpriced stocks are a pain in the neck for several reasons. Not only do they often make for disappointing long-term returns, but also they can drive you crazy in the short run ("expensive" stocks can easily become "ridiculously expensive" for at least a period of time). So what, then, to make of Frontier Oil (NYSE:FTO) -- certainly no great bargain, but also a well-run player with some strategic advantages.

It's been quite a trick to make money as an oil refiner these last few years, but Frontier does a pretty good job of it, generating returns on capital that have even mighty Valero (NYSE:VLO) and Tesoro (NYSE:TSO) looking up at it. And it certainly doesn't hurt that Frontier has heavy crude processing capabilities conveniently located to the heavy Canadian crude that the tar sands produce.

Results were certainly strong yet again. Revenue rose 46% on the back of a 13% increase in the volume of products sold. The spread between light and heavy crude grew about one-third to around $19 per barrel, and the diesel crack spread grew more than 56% to around $19 per barrel, while the gasoline spread rose alomst 27% to more than $9 a barrel.

Spreads were very much in the company's favor; the spread between light and heavy crude grew about one-third to around $19 per barrel, and the diesel crack spread grew more than 56% to $15.51. Gasoline meanwhile rose almost 27% to over $9 a barrel. All that, in turn, fueled very strong earnings and cash flow performance.

Unfortunately, it kinda looks like Frontier is a little stuck with that cash. There are refinery upgrades possible, but there's not much in the way of reasonably priced acquisition possibilities out there. And the idea of building new refineries from scratch is pretty much dead on arrival. Then again, it's not like dividends and share repurchases are a terrible thing.

Far be it for me to say that historically high refining spreads can't go higher, but that's just not a bet that I want to make with my own money. And let's not forget the risk of stupidity from Washington, D.C. -- if congressmen feel the urge to do "something" about the price of gasoline, it's anybody's guess as to whether they'll go after refiners like Frontier, producers like Apache (NYSE:APA), producer/refiners such as ExxonMobil (NYSE:XOM) and BP (NYSE:BP), or some combination of all three.

I give full marks to Frontier as a great company with some meaningful operational advantages. I'm just not all that excited about paying this much for the stock.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).