Tiffany (NYSE:TIF) shares are on a tear. While you might not be able to buy any jewelry in the company’s stores, could you profit by adding its stock to your porfolio?

For starters, it looks like Tiffany is growing many times faster than the U.S. economy’s 1.8% rate. In March, the company said it expected 2011 sales to be up between 12% and 14%.

But there’s one problem — 24% of its 233 stores around the world are in Japan — and Tiffany expects a “mid-single-digit percent decline” in those stores. As a result, Tiffany reduced its first-quarter earnings per share estimate to 57 cents from 62 cents — still 2 cents above analysts’ estimates.

Still, Tiffany’s stock has been going gangbusters — sitting near an all-time high of $70.13. And those shares have risen more than 37-fold since their IPO in 1987 — rising at a compound annual growth rate of 16.4%.

What’s more, the company just bumped up its dividend on Thursday to 29 cents, which moves the stock’s yield up to 1.7%.

Can Tiffany stock keep up this prosperous pace? To think about that, we can look at its price-to-earnings-to-growth (PEG) ratio — a way to determine whether the value that the market assigns a stock is justified by the rate at which it expects the company’s earnings to grow. I think a PEG of 1.0 is a fair price, and anything below that is a bargain.

At a PEG of 1.6, Tiffany is a pretty expensive stock. Its P/E of 24 is based on earnings being expected to grow 15% to $3.82 a share in 2012. So the biggest chance for an increase in Tiffany stock price would be the result of a positive earnings surprise.

But a look at its most recent five quarters’ earnings surprises yields mixed news. On the one hand, Tiffany has exceeded analysts’ estimates by an average of 13% over the most recent five quarters. On the other hand, this average masks wide variations by quarter — in some, Tiffany was 4% over estimates and in others it outperformed by as much as 33%.

If the past is a prologue, Tiffany could deliver a meaningful upside surprise when it reports first-quarter results. Given its high valuation, however, any disappointment could be bad for the stock. If you think Tiffany will beat by a wide margin, this might be a good time to buy. Otherwise, come back to it again after Tiffany plummets in the wake of an earnings disappointment

Peter Cohan has no financial interest in the securities mentioned.