(MONEY Magazine) – While Drexel Burnham Lambert and its junk bond impresario Michael Milken struggle with the Securities and Exchange Commission over charges of insider trading and other securities violations, investment strategists are debating what effect Drexel's legal troubles will have on stocks and bonds. In the junk bond market, which Milken created almost singlehanded, major competitors would be able to replace Drexel in underwriting new issues and making a market in existing bonds. The real test, say some analysts, would come if a recession trips up highly leveraged junk bond deals. ''I'm ready to believe the other guys can do new issues,'' says editor Michael Murphy of the Overpriced Stock Service in San Francisco. ''But I don't think they have Milken's skills in restructuring deals that go bad.'' (For the possible effects on high-yield mutual funds, see the story on page 159). Murphy goes as far as warning investors to avoid shares of financial services companies that hold large junk bond portfolios. Chief among these, says Murphy, are insurer First Executive and Columbia Savings & Loan, both in Southern California. Other S&Ls with hefty amounts of junk bonds include Imperial Corp. of America in San Diego, Gibraltar Financial in Beverly Hills and CenTrust Savings Bank in Miami.