Costco sign on building

Image source: The Motley Fool.

Last year wasn't a rewarding time for Costco (NASDAQ:COST) investors. Shares of the warehouse club slipped 1% in 2016. That may not seem like much, but it breaks a streak of seven consecutive years of gains. You have to go all the way back to 2008 -- a dark year for most stocks -- to find the last time that Costco shareholders lost ground. 

History is on Costco's side to bounce back. After all, the stock has moved higher in seven of the past eight years. Last year just happens to be the exception. The stock has also inched higher so far in 2017, moving up by 2.5% this month through yesterday's close.

Following the money

At least one Wall Street pro feels that Costco will get back on track this year. Stifel analyst Mark Astrachan resumed coverage of the stock late last week with a buy rating. He feels that favorable comparisons and macro trends along with a likely membership fee increase should fortify Costco's finances.

Astrachan feels that the positive factors will result in Costco's operating profit growth to accelerate in 2017. Tack on the market rewarding Costco with higher valuation multiples in a more conducive climate and the stock's bounce seems likely. His price target of $185 suggests 13% of upside off yesterday's close.  

He wasn't alone. Goldman's Matthew Fassler also became a bit more bullish on the stock last week, adding Costco to his firm's conviction buy List. He's betting on accelerating bottom-line growth, fueled by a more favorable credit card deal and the upbeat prospects for Costco's niche. The retail environment has been tricky lately, but that only drives consumers to the warehouse club model to stretch their money. Fassler has a price target of $187 on the stock, slightly higher than where Stifel analyst Astrachan is perched.

Bulking up for a rebound

Costco has been a market darling over the years. Its bulk-sized wares and frills-free warehouse setting generate savings that are passed on to consumers with more than enough trickling its way down to the bottom line.

It's been a historically strong performer, but that's not the case these days. Costco has fallen short of Wall Street's profit targets in three of the past five quarters.

Top-line growth has also slowed. Costco has seen its sales growth slide from 7.1% in fiscal 2014 to 3.2% a year later to 2.2% in fiscal 2016. The good news is that growth is showing signs of life. The 3.2% uptick in revenue for its most recent quarter was its strong growth in nearly two years. Analysts see revenue growth accelerating through the fiscal year, and naturally that's just one more reason why Costco is well positioned to bounce back in 2017.