Is Grocery Outlet Holding (GO) About to Explode?

We recently compiled a list of the 12 Stocks That Are About to Explode. In this article, we are going to take a look at where Grocery Outlet Holding Corp. (NASDAQ:GO) stands against the other stocks that are about to explode.

Despite the current headwinds and uncertainty (which also caused heightened volatility in the last 2 weeks), there are indications that the recent US stock market correction was short-lived, and the market could return to growth. Helping the stock market move higher was a rebound in February’s retail sales, following a downward revision in January. The pattern of evolution hints that January’s sluggishness was more weather-driven and had little to do with the general strength of the consumer. Yardeni Research recently expressed a strong belief that retail sales will move higher in March and April, supporting the economy. Also, the recent cuts in real GDP growth projections for the first quarter of 2025 by the Atlanta Fed are primarily driven by a minority of economic niches dependent on public spending, while the core economic sectors remain strong. With that being said, we are currently at a potential bottom of the market correction, which could represent a favorable moment to pick stocks that are about to explode.

Insider trading, specifically purchases made by key executive officers and directors, can often signal future stock price appreciation. When insiders buy shares of their own company, it suggests that those with the most intimate knowledge of the firm’s prospects view the stock as undervalued. Economic research supports this idea; for instance, Lakonishok and Lee (2001) found that insider buying tends to precede periods of higher-than-average returns, indicating that insider purchases provide meaningful predictive power regarding stock performance. Therefore, tracking insider transactions, particularly when top management is actively buying shares in companies that are at or near 52-week lows, may help investors anticipate stocks that are about to explode.

READ ALSO: 10 Stocks Set to Explode in 2025

Insider trading signals become particularly relevant as the new Trump 2.0 regime has caused a plethora of industries to crash and trade near their lows – the tariff news cycle has become exhausting, causing uncertain capital spending plans on top of direct cuts to many government programs and spending. The policies of the new US administration could indeed have long-lasting effects on many industries, such as government contracting (the closure of USAID represents a giant erosion of the total addressable market). Here’s what Treasury Secretary Scott Bessent recently said:

“The market and the economy have become hooked, become addicted, to excessive government spending, and there’s going to be a detox period… Could we be seeing this economy that we inherited starting to roll a bit? Sure. Look, there’s going to be a natural adjustment as we move away from public spending.”

Despite major changes being made in some directions, we do not exclude the possibility that many companies, that reached new lows since the election day of November 2024, are mainly driven by investors’ fears and uncertainty, which may or may not materialize. For instance, many healthcare stocks have been trading lower on fears that Republicans will start digging into Medicare/Medicaid reimbursement policies and potentially interfere with the revenue base of companies relying on those programs. In this context, watching for potential hidden signals from insiders (such as significant insider buying) may help clear out any uncertainty, fear, and doubts by providing a tangible indication of management’s confidence in the company’s future prospects.

Our Methodology

For this article, we used Insider Monkey’s insider trading screener to find stocks with at least two insiders buying shares worth at least $100,000 in 2025. Then, we considered only the stocks that are at or near their 52-week low. Our belief is that at least two insiders buying a significant amount of stock while the share price is at or near the lows represents an increased probability that the bottom is in rear-view mirror. Finally, we compare the list with our proprietary Q4 2024 database of hedge funds’ ownership and include in the article the top 12 stocks with the largest number of hedge funds that own the stock. Analysts’ projections for each stock’s upside potential were also included to assess their likelihood of significant growth.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Grocery Outlet Holding Corp. (NASDAQ:GO)

Number of Hedge Fund Holders: 33

Analysts’ Upside Potential as of March 27: 10.16%

Grocery Outlet Holding Corp. (NASDAQ:GO) operates a network of discount grocery stores specializing in opportunistic purchasing and value-focused retailing. The company offers branded groceries, fresh produce, refrigerated and frozen foods, deli, dairy, general merchandise, and health and beauty care products at discounted prices, typically through sourcing surplus inventory, closeouts, and manufacturer overruns. GO operates primarily through independently owned and operated stores under a flexible franchise model, targeting value-oriented customers seeking savings on quality goods. It is among the stocks that are about to explode.

Grocery Outlet Holding Corp. (NASDAQ:GO) delivered solid Q4 results with comparable store sales increasing 2.9%, driven by 3% growth in comp count as customers responded to their assortment of “WOW!” items featuring deepest discounts. The company is implementing significant strategic changes, including appointing new leadership with Jason Potter as CEO and Chris Miller as CFO, while also reassessing their new store opening strategy. The company is tempering near-term unit growth expectations, planning to open 33-35 net new stores in 2025 instead of the previously planned 50+ stores, focusing on existing markets and high-priority adjacent markets to improve store performance and return on invested capital.

Grocery Outlet Holding Corp. (NASDAQ:GO) has made progress on systems transition work but still faces some challenges, particularly around inventory management tools for operators. On the supply chain front, the company has decided not to pursue multi-temperature distribution expansion and instead is simplifying its regional supply chain strategy, including opening a new 680,000-square-foot ambient distribution center in Vancouver. The company has implemented a workforce reduction as an initial step to reassessing its G&A cost structure and is exploring additional opportunities to scale G&A through automation and process improvements. While facing near-term challenges, management remains confident in the long-term potential of the business, citing vast white space with the potential to open over 4,000 stores across the United States.

Overall GO ranks 6th on our list of the 12 stocks that are about to explode. While we acknowledge the potential of GO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.