The best sort of companies to invest in during a recession are generally companies that see steady growth in customer demand, even in bad times. These are often companies that offer a newer, better way of doing things. They tend to provide their customers with amazing products or services at bargain-like prices. Customers tend to stick with these companies in good times and bad because they know they provide a lot of value for the money. 

Three companies that fit this description well are Amazon (AMZN 0.90%), Netflix (NFLX -0.31%), and Peloton Interactive (PTON -1.61%). Here's why these three top tech stocks are good buys in a recession.

Two Amazon deliver workers communicate in or near an Amazon deliver van.

Image source: Amazon.

1. Amazon: The innovation king

The underlying driver of Amazon's long-term growth has always been the incredible value proposition it provides for its customers. In fact, a "customer obsession" has been deeply ingrained in the company's culture ever since Jeff Bezos founded Amazon in 1994.

Customer obsession means relentlessly pleasing the customer with a vast selection, rock bottom prices, fast shipping, and fantastic customer service. In e-commerce generally, no one beats Amazon at those four things, which explains why Amazon has grown so much and for so long. For example, last quarter the company grew net sales by 40% year over year, including 49% in its e-commerce business.

The most obvious example of the incredible customer value proposition is Amazon Prime. For $119 per year, Prime members get unlimited free two-day shipping, soon to be unlimited free one-day shipping, unlimited Amazon Prime Video streaming, free access to an online book library, unlimited photo storage in the cloud, and a slew of other benefits. In Bezos's 2015 shareholder letter, he wrote, "We want Prime to be such a good value, you'd be irresponsible not to be a member."

That philosophy has led to strong growth in the number of Prime members. Amazon only occasionally reports the figure, but in January it disclosed there were over 150 million paid Prime members globally. That was up from the "over 100 million" paid Prime members that existed in April of 2018. Roughly 50% Prime member growth in less than two years is an incredible pace considering the already substantial enrollment.

Prime members are thought to spend about twice as much on Amazon as those who aren't Prime members. That's because the $119 Prime membership cost has already been spent, so members naturally want to get free, fast shipping on more of the items they purchase. That makes Amazon the first place Prime members look to buy the items they need.

For consumers, money has to go further during recessions. Given that Amazon has the largest selection, is rarely beaten on price, and delivers items to consumers' doors faster than anyone else, it's not surprising that Amazon gains share of our wallets during downturns. That's why it is one of the best companies to own during a recession.

The cast of Netflix's Stranger Things.

Image source: Netflix.

2. Netflix: The streaming video on demand leader 

Netflix is a great business to own during downturns for similar reasons as Amazon. At only $12.99 per month in the U.S. for the most common subscription tier, Netflix subscribers get a seemingly never-ending stream of unlimited, ad-free, on-demand video content. It's hard to find a better value proposition in home entertainment.

Remember when we used to go out to the movies sometimes? A couple might spend $25 on tickets and $20 on popcorn and drinks for a two-hour movie in the theater these days. Not much of a bargain when compared to the cost of Netflix, especially when you consider the average Netflix subscriber watches about two hours of Netflix per day, according to Cindy Holland, Netflix's Vice President of Original Content. That implies Netflix costs about $0.22 per hour for the average subscriber.

It's not surprising Netflix has continued to grow so quickly for so long. For example, in its last earnings report, the company said it grew global paid subscribers -- now at 193 million -- by 27% year over year.

Because of its popularity, its wealth of content, and its bargain-priced offering, Netflix would likely be one of the last things subscribers would consider cutting from their budgets during a recession. That's why investors can buy and hold Netflix stock with confidence, even during downturns.

A man works out on a Peloton stationary bike while a woman walks by inside a residential home.

Image source: Peloton.

3. Peloton: The interactive home fitness pioneer

Peloton is another great business to buy during an economic downturn due to its customer value proposition. That might sound surprising considering the Peloton bike costs $2,245, but a close comparison of the cost of being a Peloton "Connected Fitness" member to the cost of being a fitness center member is illuminating.

Between the $2,245 hardware cost and the $39 per month subscription, a Peloton member would spend $6,925 over a 10-year period. That's about $58 per month. The average gym membership in the U.S. also happens to cost $58 per month, according to the company. So Peloton is no more expensive than the typical gym membership on a long-term basis.

But two factors tilt the conclusion massively in Peloton's favor. First, the average Peloton subscription has two users, which brings down the average monthly cost to closer to $29 per month per user. Peloton even allows an unlimited number of household members on one membership, so it could cost very little per month per user in larger households. Either situation potentially makes Peloton a real bargain compared to the gym.

The second factor is engagement. Peloton's average Connected Fitness subscriber did 17.7 workouts per month last quarter. That's an incredible level of engagement. In contrast, one survey of 5,313 gym members indicated that 63% of gym memberships go completely unused. And 82% of gym members go less than once per week. 

Going by those averages, Peloton is a screaming bargain on a per-workout basis. Peloton's $39 per month for 17.7 workouts implies a cost of just $2.20 per workout. For 82% of gym members who go at most once per week, the typical $58 per month gym costs at least $13.39 per workout. A gym member would have to go more than 26 times per month to bring down the cost per workout in line with Peloton's. 

Additionally, there are other intangible benefits of Peloton. The bike is sitting in your own house, so there is no time or gas money spent getting to the gym. And with Peloton, there are no concerns about whether the person sweating and breathing heavily next to you may have COVID-19.

For these reasons (and others), investors should consider Peloton a recession-resistant stock as it clearly offers a demonstrable value proposition for its customers.