Looking out the window, there may be no tangible signs of spring in the wintry regions of the U.S. But even where the snow is still falling, retailers are stocking up on warm-weather fashions, and investors are gauging who will find favor with finicky consumers.

For investors looking to cash in on seasonal trends, Wall Street is abuzz with excitement about this year's denim craze. So far, one of the highest-flying fashion stocks,

True Religion Apparel

(TRLG)

, is one that specializes in making expensive jeans on the cutting edge of fashion. The stock has skyrocketed more than 800% since August.

These impressive gains have gone below the radar for most investors, since the stock trades over the counter rather than on a more reputable U.S. stock exchange. Still, selling jeans that start at $172 a pair, True Religion reported Monday that 2004 sales increased almost 14-fold from the prior year, to $27.7 million, catapulting it from a loss of $10,782 in 2003 to annual earnings of $4.2 million. For the quarter, it met analysts' expectations, reporting earnings of 12 cents a share.

While such a performance isn't sustainable, Wedbush Morgan Securities analyst Vera Van Ert expects the company's bottom-line growth to exceed 100% in 2005 before slowing to a respectable 25% for the next two years. While the company is trading at roughly 24 times its 2005 earnings estimate at $11.85, Van Ert values the stock at 25 times earnings and sets a 12-month price target at $12.

"The denim category is very strong this year, particularly at the high end," Van Ert said. (She does not own shares in True Religion, and her firm has no banking relationship with the company.) "I'm looking for that to continue for some time, and True Religion is definitely a leader in this."

The company ended the fourth quarter with $2.9 million in cash on its balance sheet, up from $64,431 at the end of 2003, and no long-term debt. Van Ert estimates the company ended 2004 with free cash flow of around $5 million.

Several Wall Street sources have recently told

TheStreet.com

they're expecting True Religion to list on the

Nasdaq

, which would be a positive catalyst for shares, and there is also speculation the brand could be acquired by a company like

Liz Claiborne

(LIZ)

or

Jones Apparel

(JNY)

.

Just back from the MAGIC International apparel industry trade show in Las Vegas, Stephen Monticelli, president of Mosaic Investments, said he was surprised that True Religion shares had not yet transitioned onto the Nasdaq. He was enthusiastic about the company's prospects.

"There seems to be no limit to the price some women will pay for designer jeans if they think it makes them look good," Monticelli said. (He does not own shares in True Religion, and his firm has no banking relationship.)

Started in the fall of 2002 by Jeff Lubell, a 25-year veteran in the jeans industry, True Religion now sells its clothing in numerous high-end department stores like

Nordstrom

,

Neiman Marcus

and

Saks

. It's also distributed through more than 300 high-end boutiques concentrated around New York and Los Angeles, and the company is expanding into stores internationally. Van Ert estimates its overseas sales could more than double in 2005 to $29 million.

For all its merits, investing in a single fashion brand carries inherent risks because of the shifting attitudes of consumers. Investors wary of making such a bet on a stock that has yet to list on a major exchange could take a look at

Urban Outfitters

(URBN) - Get Report

, which offers a more conservative play on spring fashions.

The upside in a stock like Urban Outfitters probably is less, considering it already fetches a premium price. But this apparel chain for teenagers has a proven track record of staying ahead of fashion trends, and it offers investors a diversified portfolio of hot brands rather than one potential flameout.

At $41.85, the stock trades close to 29 times earnings estimates through 2006, high compared with most of its peers. But the price reflects the company's ability to reliably post solid same-store sales gains every month, a sign that it is continually gaining popularity with perhaps the most coveted consumer demographics.

"They are the authority in terms of offering cutting-edge, premium, price-point brands that are in demand by their customer base," said Neely Tamminga, a senior research analyst with Piper Jaffray.

Tamminga expects Urban Outfitters' impressive sales trends to continue, saying it has the potential to meet or exceed expectations for 5% comps in its first quarter against difficult comparisons from last year. But the real attraction to the stock for the long term is its potential for growth. She said the company could grow its store base an average of 25% over the next few years without even approaching a saturation point.

"Will it ever come cheap? Probably not," she said of the stock. "But we're looking for earnings growth in 2006 to increase at 31%, and I see upside potential to that. At this price, there are certainly upside opportunities for the stock."

Last week, Tamminga upgraded shares of Urban Outfitters to outperform, predicting the spring season would be fruitful in this category. (She does not own shares in the company, but her firm does make a market in its stock.) Its sales have increased 22% over the past five years, and it has fueled its expansion with little debt.

In the short term, look for Urban Outfitters to benefit from its relationship with True Religion. It has been carrying the brand for a year in only 10 of its stores, due to its high price point, but True Religion has plans for a lower-priced denim bottom that could extend its relationship with the company.

"True Religion really seems to be onto something big," Monticelli said. "This denim thing has a lot of legs."