Retail analysts bet on Kate Spade, Signet to win

Only a few hours into 2015 trading, and one analyst has already identified what he considers a "triple threat" retail strategy for the new year.

Earlier Friday, Sterne Agee analyst Ike Boruchow said in a note to investors that he's taking a "balanced approach" to 2015 by choosing companies that capitalize on themes including growth prospects and defensive plays.

A woman walks past a Zales store in New York, Feb. 19, 2014.
Scott Eells | Bloomberg | Getty Images

Boruchow's top retail picks are:

Signet Jewelers—the "special situation": Although the owner of Kay Jewelers benefited from a 65 percent boost in its share price last year, Boruchow sees more room for the stock to run in 2015.

With its acquisition of Zale in the rearview mirror, he said the stock is in a unique situation because synergies from the purchase should start to take shape this year. The company should also benefit from declining gold prices, which will help lower costs and help boost margins.

Additionally, "the core Sterling business [which is made up of Kay and Jared] remains solid, and Zale should steadily improve as management is able to apply their best practices to that underperforming business," he said. Shares of Signet Jewelers reached a high of around $132 last year.

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Kate Spade—the growth opportunity: After topping $42 during the year, shares of the affordable luxury brand finished 2014 right where they started, near $32. Much of the company's unsteady performance came from the less-than-stellar reception of its new, lower-price Saturday label, which led to markdowns and a gross margin decline.

But Boruchow said the company will lap these liquidation sales in the first half of 2015, "resulting in very favorable margin compares." That's on top of what he expects to be sustained same-store sales growth. And with only about 150 stores in the U.S., Boruchow noted Kate is just 40 percent toward its target number of domestic locations.

Sally Beauty—the defense tactic: Shares of Sally Beauty also ended 2014 relatively flat near $31, after dipping as low as $24. Boruchow said an improved marketing campaign and the introduction of new brands, such as OPI nail care, have contributed to stronger comparable-store sales. The company also named a new CEO, Christian Brickman, who could give the business a "needed kick-start."

And unlike some trendy retail picks, Sally Beauty is a more defensive play because many of its essential beauty products include replenishment items that consumers buy repeatedly despite the ups and downs of trends and market conditions.

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Sally Beauty also boasts some growth potential. Boruchow said same-store sales could reach management's forecast and improve between 3 and 4 percent by year's end. Plus, margins should improve following more attractive products. Externally, lower energy and gasoline prices could help boost spending and sales among its moderate-income shoppers.

Retail stocks on the run
Retail stocks on the run

Still not sure where to invest for 2015?

Earlier this week, JPMorgan analyst Matthew Boss told CNBC that TJX is on his top-pick list, a play on the growing off-price sector. He also named athletic and outdoor brands Nike, VF Corp and Foot Locker.

"That's what's working and I think that's what's going to continue to work," he said, speaking about the movement toward athletic apparel and footwear known as "athleisure."

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Canaccord Genuity analyst Laura Champine is betting on a well-known household name. She upgraded shares of Bed Bath & Beyond to "buy" from "hold" earlier Friday, citing the company's increased focus on the Web as well as improving performance in physical stores.

"Our store visits and surveys suggest the company turned in a strong showing over the holiday season," said Champine in a research note.

Amid all the bullish retail picks, investors of course will be closely watching consumer confidence in 2015, and whether that mood—along with energy savingswill translate to big growth for retailers.