I Predicted Lemonade's Big Move in 2025. Here's 1 Stock I Think Will Soar in 2026.

About a year ago, I published an article of bold predictions for the stock market in 2025. To be fair, I wasn't right about all of them.

However, one that I feel was highly accurate was my prediction that there would be a lot of speculative stocks outperforming the market. In fact, one of the stocks I specifically called out, insurance disruptor Lemonade (NYSE: LMND), ended the year with an outstanding 95% gain.

Why I was right

Not only did general appetite for speculation among stock market investors increase in 2025, but Lemonade's progress on both the top and bottom lines was fantastic as well.

Image source: Getty Images.

As of the latest quarterly report, Lemonade's in-force premium grew by 30% year over year, which is not only strong but also represents an acceleration over the 24% growth rate over the previous one-year period.

Even more impressive was Lemonade's gross loss ratio, which is the percentage of premiums it pays out to cover claims. Over the past year, the trailing-12-month gross loss ratio has steadily decreased from 77% to 67%. It's tough to overstate what a big deal this is, as Lemonade's stated goal is to maintain a loss ratio of less than 75%. A 67% gross loss ratio opens the door to significant profitability over the long term.

As a result, Lemonade's gross profit more than doubled year over year, and the company now has positive adjusted free cash flow.

In short, Lemonade's numbers are all trending in the right direction, and the path to consistent profitability is clearly forming.

A top stock to buy for 2026

The stock I'm predicting will have a big move in 2026 is financial services company Klarna (NYSE: KLAR), which went public in mid-2025 and is down by about 25% since its IPO.

To put it mildly, Klarna's momentum, especially in the United States, is impressive. Its customer base is expanding by over 30% annually, the Klarna Card debit card product got more than 4 million signups in just a few months, and revenue grew by a staggering 51% year over year in the U.S. in its latest quarterly report.

Just recently, Klarna has made some big announcements. It launched its financing products on Apple Pay in several European countries, announced a partnership with Coinbase (NASDAQ: COIN) to support stablecoins as one of its funding sources, and started developing a Klarna-specific cryptocurrency wallet for users.

Only about 2% of U.S. commerce volume is buy now, pay later financing, but that's not Klarna's opportunity. The company targets the roughly two-thirds of commerce volume that is currently flowing through debit and credit cards, and the momentum so far has been impressive.

Matt Frankel, CFP has positions in Klarna Group and Lemonade and has the following options: short March 2026 $105 calls on Lemonade. The Motley Fool has positions in and recommends Klarna Group and Lemonade. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.