Legg Mason's Dmitry Khaykin shares the stocks he considers essential to own in a weak economy in this video. If a company's product or service isn't essential, it has no place in Dmitry Khaykin's mutual fund. "What we mean by essential is something that a consumer needs every day of their lives," says Khaykin of the Legg Mason Partners Investors Value Fund ( SAIFX). " Wal-Mart ( WMT), for example, sells groceries and products that consumers need every day. And Wal-Mart is the lowest-cost retailer, so they have a tremendous advantage over their competitors." Khaykin's fund, which he co-manages with Robert Feitler, is down 24% this year, on par with the S&P 500. Over the past 10 years, the fund is flat on an annualized basis, 3.5 percentage points better than the index. That's good enough to place it in the top quartile of all large-cap value funds tracked by Morningstar, which assigns the fund four out of five stars. Khaykin owns less than 60 stocks in the fund and tends to hold on to them. The turnover rate for the fund is 23%, which means less than a quarter of the fund's assets are replaced each year. The manager concentrates on picking individual shares, a so-called bottom-up approach, rather than evaluating an industry or the economy first. Khaykin is bullish on energy stocks due to the dramatic decline in oil and natural gas prices. He favors El Paso ( EP) for its pipeline business. "Over the long term, one can make a very bullish argument for oil and natural gas prices," says Khaykin. "El Paso is a recent addition to our portfolio, and its pipeline business, in which it is basically a toll-taker, is very cash-flow generative."