One of this year's biggest winners is Square (NYSE:SQ). The transactions field leveler has nearly tripled in 2017, up 181% through Monday's close. Despite its spectacular run this year, Square stock has actually retreated by 23% since hitting all-time highs late last month.

Square's big run in 2017 means that it won't take anyone by surprise in 2018, and it would be a surprise if returns cool off in the year ahead. Cowen analyst George Mihalos initiated coverage of Square on Monday with a neutral rating and a $36 price target, arguing that the shares are fairly valued at this point. This doesn't mean that the party's over. In fact, this could just be the start of something even bigger. 

Square running on an iPad with the open tab feature.

Image source: Square.      

Coin a phase 

The catalyst for Square's push to new highs last month was the move to allow some users of the Square Cash app to buy and sell bitcoins. With more cryptocurrency marketplaces sprouting and now even a futures market available, it's easy to see why that sizzle has gone, but let's not dismiss everything that Square has accomplished this year. 

Revenue growth has decelerated every year since 2013, but things are starting to stabilize. Square boosted its full-year adjusted revenue guidance last month from between $925 million and $935 million to between $963 million and $966 million, growth of 40.3% at the midpoint. Analysts are targeting an increase of 32% in 2018.   

Square hasn't necessarily been an earnings-driven story in the past, but that's starting to change at this phase of its life cycle. Square has beaten Wall Street's profit targets by at least 40% in each of the past four quarters. It also boosted its adjusted earnings guidance last time out. Square now sees a profit per share of $0.24 to $0.25 for all of 2017, and analysts see an 84% surge in the year ahead. Square is starting to put it all together on the bottom line, and even Timothy Willi at Wells Fargo -- who initiated coverage of the stock with a neutral rating last month -- sees compounded earnings growth of 50% through 2020.  

Pick pockets

Lukewarm and even bearish analyst calls have come with an alarming frequency in recent weeks, and the lack of optimism centers largely on valuation concerns and last month's bitcoin-fueled rally. The stock has outpaced its fundamentals in 2017, but one can argue that it was the other way around in 2016, with only modest stock gains despite headier adjusted revenue growth of 52%. Square did kiss the baron of baristas goodbye in 2016, but it was more of a profit-slurping albatross than a platform validator at that point. 

Square is looking good heading into 2018. It remains the mobile point-of-sale platform of choice for many small- and mid-size merchants. Competitors big and small will be gunning for Square, but it's hard to argue with the growing gross payment volume that it's processing with every passing quarter. 

Square went public at $9 in late 2015, and it has now moved higher in each of its first three years on the market. The stock isn't going to nearly triple again in 2018, but momentum and improving fundamentals should help stretch its winning streak to four years of gains.  

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of Square. The Motley Fool has a disclosure policy.