If you want to compress archive such as gzip, you can pipe stdout to gzip.
i.e. star -c target | gzip > output.tar.gz
extract archive
star -x [destination] < input.tar
When you don't specify destination, current directory is used.
If you want to compressed archive such as tar.gz, you must decompress with another tool.
i.e. gzip -dc input.tar.gz | star -x dest