While the financial sector looks gloomy as Lehman Brothers continues its search to find a suitor, there are still attractive companies in the sector, Wouter Weijand, chief investment officer for high income equity of Fortis Investments, told CNBC Friday.

Qatar's Doha Bank, French insurance heavyweight AXA and U.S. bank People's United Financial are the best bets, Weijand said.

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Doha Bank has a strong market share and a strong margin position, Weijand pointed out, adding that the Middle Eastern bank is expanding in Kuwait and Oman.

"They are just way too cheap and that's why we want to pick this stock," Weijand told "Worldwide Exchange."

AXA is also attractive a current levels after recent selloffs, Weijand said. Investors should look to their "great" second-quarter results and exposure to emerging markets, he added.

CNBC’s Matt Nesto said investors might want to look into placing their money in the railroad sector.

Dazzle your friends and perplex your neighbors: 'Cuz for the next two days... the S&P 500 index will only have 498 members in it.

That's because Fannie Mae and Freddie Mac were kicked out after the close of trading Wednesday -- but their replacements, Salesforce.com and Fastenal, don't go in until after the close Friday!

That not only leaves MGIC and Dillards as the 2 smallest members of the index but also the only two with market caps less than $1 billion.

But wait... there's more..!
(Contd.)

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New!

- The Dow 30 at a Glance

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Paul Hickey of Bespoke Investment Group wrote me to say:

"The rationale behind taking FNM and FRE out is that their market caps were below the $5bln threshold required for inclusion. However, as of Tuesday there were only 381 stocks in the S&P 500 with market caps of more than $5 bln, and in the US there aren’t even 500 stocks with a market cap of more than $5 bln!"

Furthermore, CNBC colleague Juan Aruego discovered another index anomoly due to the Fannie-Freddie eviction. Their ousting has actually caused the Q3 consensus earnings estimate to go negative, since both companies were on-tap to post a sharp rebound from their disastrous year-ago results.

Disclaimer

As Apple courts business customers for its iPhone, what's the best smartphone play now?

Tavis McCourt of Morgan Keegan and Jim Suva of Citigroup weighed in with their top handset stocks.

McCourt sees the field opening up to several players -- undercutting Apple. "Carriers have been subsidizing these smartphones substantially," he said. "Now, there's not that much of a difference between paying up front for a smartphone, sometimes amounting to $99, [versus] a basic handset. Why wouldn't a consumer upgrade?"

And whose handhelds will they upgrade to?

Recommendations:

"One with the most upside, as a pure play, is Palm," says McCourt. He concedes that the Treo maker is a risky play -- "but you could end up with a return similar to Research in Motion."

He advises investors that RIM, which makes the BlackBerry, is the "safer bet."

Suva also likes RIM for "delivering products today and tomorrow," and says the firm will meet holiday sales projections. But, he cautions, "we have a sell rating on Palm. It's not going to deliver for Christmas."

Suva sticks with his mid-August take on Motorola , which he sees poised for steady growth.

Disclosures:

Citigroup Global Markets owns a significant amount of shares in Palm; and may have furnished investment banking services to Palm. Motorola is an investment banking client of Citigroup; and Citigroup or its affiliates has acted as manager/co-manager of an offering of Motorola securities.

Disclaimer

Jim Huguet, president and co-CEO of Huguet Associates, said diversifying is the way to go. He sees growth opportunities in a variety of sectors despite the economic slowdown.

"You've got to look for terrific companies that have outperformed in this [volatile] environment," said Huguet.

Recommendations:

Stocks:

Natus —“The company specializes in testing of hearing in infants – their stock is up 20 percent this year.”

Dolby —“They have wonderful products and will continue to grow.”

The developments at Lehman Brothers are making the options market swirl in general, according to Rebecca Darst of Interactive Brokers.

"In general, the brokerages, en masse, took a hit to morale on Lehman's ongoing struggle to survive, but if you take a look at the volatility developments, it certainly was most interesting in Merrill Lynch ," she said on CNBC's "Squawk Box " Thursday morning. "We saw a lot of seesaw action in Merrill Lynch options yesterday; actually, at one point, late in the morning, implied volatility on all Merrill Lynch options (check options here) blasted through those mid-July highs. ... There's still a large, large risk premium being priced into the options on Merrill, twice as many puts trading as calls. ... People are getting very defensive on Meriill." (See her full comments in the video)

Of all the places to put money to work in Europe, the pharmaceutical sector is the most promising, a technical analyst told CNBC Thursday.

Investors should start positioning their portfolios ahead of the expected rebound in economic activity, Michael Yoshikami, founder, president and chief investment strategist at YCMNET Advisors said Wednesday.

It's best to focus on companies that have "global theme and management tailwinds," Yoshikami told CNBC Asia.

Paul Hickey is founder of Bespoke Investment Group, and the strong dollar has him looking for a powerful market rally. He's come up with a list of stocks he thinks will be riding that rally.

"Typically, when the dollar rallies, one thing you can count on is, stocks to rally," he told CNBC. "The average performance of the S&P 500 during dollar bull markets is about 86 percent."

While the dollar is at a 52-week high, the S&P 500 is at a 52-week low, positioning it for that big surge.

Recommendations:

So which stocks does he especially like?

His first pick is Amgen.

"The stock has pulled back, but in their most recent earnings report, they had great guidance," Hickey said. "We think this pullback is just a short-term pullback before it continues higher."

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- Video: The Dollar in 6 Months

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He also likes Ross Stores.

"It's a discount chain," he explained. "The economy is not too strong, so you get the trade-down buy consumers, and this stock has been a steady performer; it's exposed to the U.S. market, and that's what we want to look for here.

Also on his list is General Mills.

"You wouldn't think that General Mills and FedEx would have much in common, but just as FedEx raised guidance because of lower fuel costs, the lower commodities in this third quarter should help companies such as General Mills as well," he said.

The next president will likely make changes that could dramatically affect your portfolio. Tax changes are especially likely.

Two financial strategists offered CNBC tips for creating an election-proof portfolio.

Hal Rogers, a retirement strategist with Retirement Services, takes the estate/retirement plan approach: Since we can't know who'll win, we need to take advantage of strategies that work under existing laws -- strategies that will work regardless of who wins.

1. Take Some Cap Gains Now

Selling winners and limiting tax exposure are two moves that always make sense, but make more sense now with capital gains rates likely to change under McCain or Obama.

2. Beware Fewer Benefits for Heirs

The government may get rid of the "step up in basis" rules, which means any inherited investments (stocks, real estate, etc.) could have dramatically more capital gains exposure than under current laws. This is something a tax-hungry president could do easily.

Example: Now, if you buy at 10 and sell at 15, you pay tax on 5. But if you give it to your son at 15 and he sells at 15, no tax. They will change this.

3. Estate Tax May Not Die in 2010

Under current legislation, in 2010 the credit against estate taxes will be unlimited. There will be NO estate tax! With the current downturn in the economy and resulting tax revenue decrease, it's not likely Congress will leave this as is.

As of right now, the estate tax credit (in effect the exemption) is $2 million. In January 2009 it will be $3.5 million, and in 2010 it will be unlimited.

4. Company Stock Exemption May Disappear

This is a little-known, little-used tax exemption that a new president may eliminate. Currently, the rule (net-unrealized appreciation or NUA) allows holders of certain company stock to take that stock out of their 401(k) without paying taxes.

The stock is taxed on its cost basis. If you got it for free, perhaps as a company match, it has no cost basis. No cost, no tax!

But this only works if you take it from your 401(k) and put it, for example, in a brokerage account. If you roll it over into an IRA this exemption is lost. Many people make this mistake when they change jobs.

In any case, the NUA provision could be eliminated by a tax hungry president.

Dean Barber, founder, president and chief investment officer of Barber Financial Group, takes the investment approach based on the uncertainty the election adds to the current economy.

1. Stay Away from Discretionary Stocks

Avoid areas like retail. Go to staples, like P&G , for example. The consumer will cut back on spending. So anything consumer related will be volatile.

2. Sell Out of High-Dividend-Paying Stocks

There's been so much emphasis on capital gains. But the special tax rate for dividends, also 15 percent, will likely go away too, whichever side wins.

3. Get on the Short End of Bonds

Commodities prices have fallen, but are still likely to rise. And rising inflation will be a threat whether it's a Democrat or a Republican in the White House.

4. Get Out of the Market for a Time

Be prepared for higher taxes across the board. If that happens, you want to get out of the market for some period of time. If consumers slow spending and consumers are 70 percent of GDP, that will lead to corporations needing to produce less, which will lead to layoffs. And if government has a smaller tax base, it must raise taxes. You can keep contributing to your 401(k), but put it in short term bonds. Otherwise take dramamine, close your eyes and hang on.

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• Dow 30 At a Glance

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Disclosures:

Disclosure informatfion was not available for Rogers, Barber or their companies.

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