Mall traffic has remained negative for most of the year, with the holiday season showing even more weakness. The normalized mall traffic numbers for the last two weeks of November showed a year-over-year decline of 3%-4%. December wasn't much better. Traffic was down for the first three weeks of the month, but up slightly in the fourth week. So, the mall retailers likely didn't have the greatest holiday season, including Aeropostale and American Eagle (AEO -0.13%).

However, one of the best underrated mall-retail plays, Urban Outfitters (URBN -0.14%), proved resilient despite weak mall traffic. For the holiday season, its sales were up 8% year-over-year and its comps were up 3%. What's more is that for the 11 months ended Dec. 31, 2013 Urban's companywide sales were up 11% year-over-year and its comps were up 7%.

This comes as Urban saw impressive strength in its Free People and Anthropologie brands with their comps up 21% and 11%, respectively. It appears that Urban and The Buckle (BKE 0.38%) have had the most success with their apparel being on-trend in the fashion industry. 

The Buckle trades at 15 times earnings and pays a 1.7% dividend yield. The Buckle also has one of the strongest returns on equity in the business at 40%. However, is The Buckle the best buy in the mall-based retail space? Not exactly. The Buckle's PEG ratio is 2.5; compare that to Urban Outfitters' PEG ratio of 1.25. American Eagle has a PEG ratio of 2.9. 

Why investors should love Urban
Urban also boasts a debt-free balance sheet, which can be rare in the retail space. Unlike some other retailers such as The Buckle, Urban has an international presence. Urban has also steadily opened stores, with between 45 and 60 stores opened each year during the last three fiscal years.

Although Urban doesn't pay a dividend, it is active on the share buy-back side. For fiscal 2012, Urban bought up 20 million of its shares for over $500 million. Worth noting is that top competitor The Buckle does pay a dividend and it has been doing so since 2003. Its current dividend yield is around 1.4%. As mentioned, The Buckle is heavily focused on the U.S., with nearly 450 stores primarily focused on the Midwest. 

American Eagle has taken a keen interest in international markets. It already operates in thirteen countries, and now it's turning its focus to China. American Eagle took over six franchise stores in China. China's citizens have a rapidly rising level of disposable income, and the nation's apparel market is expected to grow from $140 billion in 2012 to $220 billion in 2016. Beyond that, just last year American Eagle opened its first store in Mexico. 

Bottom line
American Eagle appears to be out of fashion. The likes of Urban Outfitters and The Buckle are now resonating with teens and mall shoppers. Urban is priced the best to succeed in the near-term. It's an "on-trend" brand and recent holiday strength suggests that the stock could potentially beat on earnings. Urban has managed to beat EPS expectations in each of the last three quarters.