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Costco (NASDAQ: COST) stock is an investor favorite. It's a reliable, market-beating stock, and it pays a dividend, has a self-generating revenue model and plenty of expansion opportunities.

Wall Street analysts, though, don't see too much upside over the next 12 to 18 months, possibly because the stock keeps climbing and has become highly valued. But you might want to consider buying it anyway.

The self-generating revenue model

I don't think there's a lot of disagreement about Costco's prospects. It has an excellent operating model that breeds loyalty and sales growth.

What do I mean by a "self-generating revenue model?" It charges members a fee to shop in its warehouses. That fee is being raised to $65 in September, and members typically make up much more than that in savings by shopping at Costco. Members want to get the most bang for their buck, so they shop frequently at Costco, leading to a cycle of sales growth and membership renewals. It's a beautiful business model.

But there's more. Costco keeps its prices low, and it's able to get the best deals from suppliers because of its high volume. It also has bare-bones warehouses with bulk-sized products, so it doesn't need to mark up prices to cover heavy extraneous costs. Instead of making profits from high markups, it makes most of its profits from the membership-fee income.

Is Costco stock too expensive?

Costco stock is trading at a price-to-earnings (P/E) ratio of 55, which is its highest ever. When a ratio like that happens, it's implied that a lot of its future growth is already baked into the stock price.

But it doesn't seem like that's making much of a difference, and Costco stock keeps soaring. It jumped on the news of the fee hike, which will add a windfall to Costco's net income. That will help the price catch up to the P/E ratio, but it won't show in the numbers for a while.

The high valuation could be why Wall Street analysts don't see a lot of upside right now. The average price target for Costco stock is $854, or about 3% lower than today's price. The high is only about 7% higher than today.

How seriously should individual investors take Wall Street's view? The more information you have when making an investing decision the better, and the Wall Street take should be included as another piece of information. You shouldn't rely on it as the last word, though. Stocks don't move according to Wall Street predictions.

There are also many covering analysts for one stock, and each one says something different. The Wall Street consensus is a composite of all the analyst ratings and target prices. There are 37 covering-analyst ratings for Costco stock, and they each add another point of view. They can't all be right.

It's likely that some analysts will change their price targets based on the fee hike, since with higher net income, Costco stock can rise without changing the valuation.

Keep your eye on the long term

It's easy to see how Costco can continue to perform well, but is that enough to make it a buy? Another way to ask this question is, how much does valuation matter?

Again, it's another consideration, and the answer is going to be different for every stock. Costco is an excellent business and will eventually grow into its valuation. It just might take some time because there's some growth priced in. Then again, some stocks do well despite premium valuations. Investors give them a premium because they're so reliable for growth. Since you can't time the market, you might want to buy Costco stock at this price. As long as you have a long time horizon, you should be fine. Another approach is dollar-cost averaging, where you start a position and buy at different points in time to benefit from price changes. Either way, Costco stock should continue beating the market for years.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.