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The 2024 holiday shopping season proved to be better than expected, as shoppers spent 3.8% more than they did in 2023, according to Mastercard’s SpendingPulse survey. That was also higher than the 3.2% boost in spending that Mastercard had anticipated.

Online sales rose 6.7% while in-store spending increased 2.9%. Apparel purchases increased 3.6% overall, with online buys making up the bulk of the increase, rising 6.7%. Also, spending on jewelry jumped 4% while electronics purchases increased 3.7%. Further, department store sales rose just 1.3%.

The hottest stocks this holiday season were in apparel, particularly specialty retailers that cater to a specific type of product or demographic. Here are the three best retail stocks this holiday season.

1. Citi Trends

Citi Trends (Nasdaq: CTRN) is a retail chain that offers apparel, accessories and home goods for primarily African American and multicultural consumers. It has some 590 stores in 33 states and has been in turnaround mode.

Over the past month, the stock price has surged 25% and it gained 40% in the fourth quarter. It recovered from a difficult first half of the year and is down about 8% over the past 12 months.

The huge jump in shares stemmed from a strong third quarter that sales comparable store sales to rise 6%. For Q4, it expected similar same store sales growth and positive EBITDA of $5 to $7 million.

Analysts are bullish on this turnaround story, engineered by new CEO Ken Seipel, as several raised their price targets after the last earnings release. Investors seem to be buying into this cheap stock as well, which is trading at about $25 per share.

2. Genesco

Genesco (NYSE: GCO) is a footwear and apparel retailer with some 1,400 stores in the U.S., Canada, the U.K. and Ireland. Like Citi Trends, the stock has been on fire as of late. Genesco stock has surged 22% over the past month and 58% in the most recent quarter, trading at around $43 per share. It might be better known for its retail stores and brands, like Journeys and Johnston and Murphy.

Genesco stock took off after it released its most recent quarterly report on December 6. It showed an overall 3% increase in sales, including a 6% rise in same store sales. Ecommerce sales rose 15% in the quarter and online sales now account for 24% of revenue, up from 21% the same quarter a year ago.

Journeys was far and away the sales driver, as Journeys revenue increased 11% year over year. Journeys gave the company a big sales boost in the Black Friday shopping week and its growth led to the company raising its guidance for Q4 and the next fiscal year.

“We are in the very early innings of returning Journeys and the overall company to historical rates of sales and profitability,” Genesco president and CEO Mimi Vaughn said.

3. Urban Outfitters

Urban Outfitters (Nasdaq: URBN) is the well-known clothing and lifestyle retailer that owns Urban Outfitters stores, as well as Anthropologie, subscription-based Nuuly, and Free People. It has been on a torrid pace, rising about 12% this past month and around 55% over the past three months. The stock is now trading at around $56 per share and has returned roughly 60% in the past 12 months.

Urban Outfitters had a record third quarter, generating $1.4 billion in revenue, a 6% increase year over year. It also saw net income rise 24% to a record $103 million, or $1.12 per share. Comparable store sales in its retail segment grew 3.2% in the quarter, led by its two biggest stores, Anthropologie, up 5.8%, and Free People, up 53%. This was ahead of expectations and is what the company anticipates for the holiday quarter.

Urban Outfitters stock is relatively cheap still with a P/E of 14, but analysts are wary of its ability to match the strong growth in had in 2024. The median price target is $47 per share, which is 16% lower than the current price. But analysts may not have been ready for the type of surge it saw in Q4.

They may change their tune after the Q1 earnings results, which could include a fiscal year outlook and results from the holiday quarter. It is a stock to keep an eye on.

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