Five veteran analysts identify the stocks worth keeping an eye on in the New Year
Corporate activity is likely to be on the agenda at GUS, the Argos-to-Experian conglomerate, thinks Investec analyst Mark Charnock. The retailer is in the midst of a strategic review, which many are convinced will lead to the break-up of the group and separate listings for its main divisions. In recent years GUS has spun off luxury brand Burberry - in which it retains a 66 per cent stake - and conducted an IPO of its South African business. Expect more this year. There is also a chance that a private equity consortium may make an£11 billion swoop on GUS.

Fashion group French Connection takes the fancy of Evolution analyst Nick Bubb. The retailer, headed by the mercurial Stephen Marks, had a tough 2004 as the strength of its brand was questioned. In November French Connection issued a profit warning but promised to sex up its spring/summer 2005 range. Bubb believes the chances of recovery or a privatisation by Marks - or both - make the stock interesting. Promised improvements to product and prices mean scope for a share price recovery.

Richard Ratner of Seymour Pierce envisages a difficult year for the retail sector, but sees potential value in AIM-listed womenswear specialist Jacques Vert. The retailer is on a 'very modest' rating but the opportunities presented by the Baird division are attractive. Ratner believes that the appointment of Shena MacDonald - a former Argos Additions and Next executive - as managing director of the womenswear division in June 2004 should make a big difference to the business.

Anglo-French electricals group Kesa will be worthwhile stock to watch, believes Philip Mitchell of JP Morgan. Market jitters about arch-rival Dixons have affected sentiment towards Kesa, but Mitchell expects continued improvement in the New Year at Kesa's French chains, Darty and But. He also believes that Kesa's management is likely to consider ways of enhancing value. That could potentially lead to a break-up of the group, which runs the Comet chain in the UK.

In a sector which is falling out of favour, little grabs the eye at the moment says Baird analyst Paul Smiddy. However, value fashion group Peacocks remains one of the analyst's favourites. He says: 'The rating continues to be niggardly for a group which has successfully transformed from a value retailer to a cheap fast fashion merchant. Now that the bonmarché management has been beefed up, we expect that division to cough less loudly.'

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