For nearly a decade, Tesco (LSE:TSCO) shares have been a sleeper stock. In fact, between 2015 and 2022, Tesco's share price basically didn't move over a seven-year period. However, since the start of 2023, the retailer has been on a rampage, stealing market share, driving up sales, and expanding its bottom line.

This trend has continued into 2025, with the stock up another 25.8% over the past six months. This means that someone who invested £5,000 in April now has almost £6,300.

But as all investors know, past performance is a bad indicator of future results. So, what should investors expect going forward?

Latest career forecasts

Since late March, Tesco's UK market share has increased from 27.7% to 28.3%. This may seem like a small difference. But when scaled up to the almost £250bn grocery retail sector, it translates into significant growth in revenues and profits for Britain's largest supermarket.

Looking at its latest results, sales rose 5.1%, from £31.5bn to £33.1bn, with underlying earnings growing even faster at 6.8%, from 14.45p per share to 15.43p. This ultimately paved the way for a 12.9% dividend increase.

For a mature retail giant, this mid-to-high single-digit growth is impressive. So it is not surprising that institutional investor sentiment remains firmly within bullish territory. Three analysts currently rate the stock a Buy, while another nine expect Tesco shares to outperform. However, when looking at the stock price outlook, things look a bit less exciting.

It seems that although experts are impressed with the trajectory of the business, current growth expectations may already be built into the stock price.

Still a chance?

Based on current forecasts, growth investors looking for double-digit returns over the next 12 months would likely be better off looking elsewhere. Of course, forecasts are not always accurate. If the department store chain continues to dominate and take market share away from its peers, the stock may continue to outperform regardless.

Having said that, it is important to recognize the increasing level of value-seeking activity on the part of consumers. As inflation continues to put pressure on household budgets, discount retailers such as Aldi and Lidl will also increase their market share in 2025.

While Tesco's Clubcard loyalty and price-matching schemes have helped keep shoppers moving through its doors, they are also cutting into already tight profit margins.

In other words, even if sales volumes remain resilient, profits may continue to falter — something that will need to be watched carefully moving forward.

Overall, I remain optimistic about the long-term potential of Tesco shares. I'm currently looking for more aggressive growth opportunities, so this is not a stock I'd rush out to buy now. However, for investors looking to build a more defensive dividend-paying portfolio, I think these retail stocks are definitely worth further investigation.