Being able to buy a hot dog for $1.50 is only one thing to like about Costco Wholesale (COST -0.27%). The stock has also been a big winner for investors.

Costco's share price has soared roughly 35% over the last 12 months. The stock has tripled over the last five years. Will the good times keep rolling? Here's what's next for Costco, according to Wall Street.

Behind Costco's strong momentum

There's a simple explanation why Costco has delivered such impressive returns: Its business is booming. Costco reported year-over-year revenue growth of 7.5% in its fiscal 2025 first quarter, which ended on Nov. 24, 2024. The discount chain's profits jumped 13.2% year over year. 

Costco had 77.4 million paid members at the end of its fiscal Q1, up 7.6% from the prior year period. Its membership renewal rate was 90.4% with an even more impressive rate of 92.8% for the U.S. and Canada.

The company is well-known for its giant warehouses that offer a wide variety of products in bulk. Costco operated 896 of these warehouses at the end of Q1. It expects to increase the total to 916 during fiscal year 2025. E-commerce has also become a key growth driver for Costco. In fiscal Q1, the company's e-commerce sales rose 13% year over year. 

This momentum accelerated in December. Costco reported year-over-year net sales growth of 8% with e-commerce sales soaring 34.4%. This unusually large e-commerce sales increase was due in large part to Thanksgiving, Black Friday, and Cyber Monday occurring one week later in calendar year 2024 than they did in 2023. 

What analysts predict 

Does Wall Street think Costco will be able to keep up its winning ways? Yes, but not at the pace we've seen over the last 12 months.

The consensus 12-month price target for Costco reflects an upside potential of around 8%. This projected gain isn't bad, but it's well below the returns the stock has delivered in each of the last two years. Not every analyst is bullish about Costco. Of the 38 analysts surveyed by financial markets data and infrastructure provider LSEG in January, 13 recommended holding the stock with one rating it as an "underperform." 

Analysts are more upbeat about Costco's revenue growth, though. The average revenue estimate for fiscal 2025 is 7.14%. Costco's revenue increased by 5% year over year in fiscal 2024. This percentage didn't fully reflect the company's improvement, though, because fiscal 2024 had 52 weeks while fiscal 2023 had 53 weeks. 

However, it's a different story for Wall Street's earnings projections. Costco's earnings per share (EPS) vaulted roughly 17% higher year over year in fiscal 2024. The average analysts' EPS estimate for fiscal 2025 reflects an increase of 9.7%. 

Is Wall Street right about Costco?

I think Wall Street's optimism about Costco's business is warranted. The company continues to execute well. Its e-commerce strategy and partnerships with InstaCart and Uber are especially paying off. Costco's private-label product sales are growing faster than the rest of its business. Disruption in the retail pharmacy market is presenting a great opportunity for the company -- one that it's seizing.

Sure, Costco could face some challenges. The potential for port strikes in Canada, the Eastern U.S., and India could cause headaches. When asked about the prospects for increased tariffs in the second Trump administration in Costco's Q1 earnings call, CFO Gary Millerchip acknowledged, "[T]ariffs raise costs, so that's not something that we see as a positive in general."  

However, Costco is pretty adept at adjusting its supply chain to at least partially address issues caused by port strikes. The company also has plans in place to adjust as needed to mitigate cost increases related to tariffs. 

Is Wall Street right about Costco's share price continuing to rise over the next 12 months? Probably, but I'd be lying if I said valuation wasn't a concern. Costco's price-to-earnings ratio is near its highest level ever. It wouldn't be surprising if the stock pulled back at some point in the not-too-distant future. If such a pullback happens, though, I'd view it as a buying opportunity.