Retail outlook is 'improving'; winners, losers crowned

Favorite retail stocks
Favorite retail stocks   

2015 is right around the corner and the retail sector could not be happier.

Joseph Feldman, senior managing director of Telsey Advisory Group, said overall retail trends have been improving.

Read MoreThese stores have the worst return policies for gifts

"We've seen some better trends in the lower end," Feldman said in an interview with CNBC's "Squawk Box" on Friday. "The gas prices have definitely helped. I think the Wal-Marts and Targets of the world did very well this holiday season."

Feldman said the gap between high-end stores, such as Coach and Tiffany, and the lower-end stores, such as Target, is narrowing.

Read More 2% to 3% growth feels perpetual: Wal-Mart CEO

Paul Swinand, an equity analyst at Morningstar, told CNBC that despite improving trends, lower-end retailers aren't doing so well. "I would say that the middle is finally starting to do better, but the actual lower end hasn't filled in the gap yet," he said.

Swinand added that the outlook for lower-end retailers could improve. "Savings rates were revised lower in November," Swinand said. "One of the things that counts for the lower end is borrowing and savings, and if those go to historical trends, then there's still some upside."

Feldman and Swinand also crowned their winners and losers within the retail realm for the year. Feldman said Best Buy was the biggest winner. "Best Buy is really well positioned for this holiday season and for next year," he said. "I'm also still a big fan of the home space, so I think Home Depot and Lowe's are going to have big years yet again."

Read MoreReturning some holiday presents? Here's how...

Swinand said he liked Coach's stock despite low traffic during the holiday season. "It's going to be a slow turnaround for them, but I think investors are going to do very well with the stock since it's undervalued."

Swinand also added that Adidas is poised for a comeback next year. "They're going to do terrible in Russia, but I think the hotness of Nike and some of the stars are going to reverse."

Feldman's biggest losers are teen apparel retailers.