Motorola Solutions (MSI 0.04%) is the remaining portion of Motorola following its spin-off of the mobile phones division into Motorola Mobility Holdings in 2011. Motorola Solutions likely fell off most investors' radar screens because it has never been a flashy hypergrowth company -- the type of stock popular in a bull market.

Also, some still associate it with the former mobile phone business it divested. But this company is the crown jewel of the former Motorola, Inc. and a worthy consideration for people looking for a company able to outperform during these difficult times.

Here is why you should consider buying this recession-resistant business.

Motorola Solutions makes essential products

This company sells products and software across three technology platforms: Land Mobile Radio (LMR), Command Center Software, and Video Security and Analytics.

LMRs are push-to-talk two-way radios that organizations can use as handheld walkie-talkies, vehicle-mounted radios, or fixed base stations. Public safety applications include law enforcement, fire and emergency-medical services, utilities, and more. Commercial industries also use LMRs in private communications networks.

Command Center Software is a cloud-based software suite that collects data from 911 calls, dispatchers, video, field reports, intelligence operations, evidence, and other sources. And it makes this data actionable for police and first responders.

Video Security and Analytics include products like video surveillance systems powered by artificial intelligence (AI), police in-car cameras, body cameras, and license plate recognition systems. 

The above services are mission-critical products and services for governments and private enterprises. Even amid a deep recession, communication and security are "must have" services. For instance, barring Armageddon, it is unlikely that local or state governments will stop buying products or services that power 911 calls and enable police, fire, and emergency-service responses. And since the company's products and services for public safety and enterprise security are essential, its business remains resilient across most economic environments.

The business has two tailwinds

Motorola Solutions CEO Greg Brown identified two tailwinds for the business in its second-quarter 2022 earnings call. 

The first is the American Rescue Plan Act (ARPA), which provides relief funds to state, local, and tribal governments that COVID has negatively affected. The benefit for Motorola is that police, EMS, fire departments, schools, and other public safety services can use ARPA money to buy security and communication products. According to Brown, the company should benefit from these ARPA-funded purchases until at least 2024.

Second, inflation is beneficial to government budgets because it often has the side effect of increasing tax revenue, driving more money into state coffers. That increases the ability to purchase more of Motorola Solutions' products and services. Consequently, demand can remain stable or even rise in an inflationary environment. 

Steady growth, profitability, and durable cash flows

Today, many investors are leaning toward investing in companies that can thrive in a terrible economy: businesses with steady growth, durable cash flows, and stable profitability. Motorola Solutions has all three attributes.

The company recently reported steady second-quarter 2022 revenue of $2.1 billion, up 9% year over year. Also, because of the company's strong and growing backlog of $13.4 billion and strong tailwinds, management raised its 2022 revenue guidance from a prior figure of 7% growth to approximately 8%. And the best part is that this growth is profitable.

The following chart shows that net income, a measure of profitability, grew throughout 2021, even as inflation spiked in April of that year. And the stock price has followed net income higher and trades only 8% below its Dec. 29, 2021, all-time high. Much better than faster-growing, unprofitable tech stocks, many of which have slumped more than 50% below their all-time high.

MSI Net Income (TTM) Chart

MSI net income (TTM). Data by YCharts. TTM = trailing 12 months.

Lastly, the company produced stable free cash flow (FCF) of $999 million on a trailing-12-month basis as of June 2022. It would have made even more, but it spent cash paying out 2021 incentive bonuses to employees and raising inventory to ensure it could meet record demand during an era of supply chain disruptions. Usually, a company will only invest in buying more inventory when it is confident of high demand for its products.

MSI Free Cash Flow Chart

MSI free cash flow. Data by YCharts.

The good news is that the company expects FCF to bounce higher in the second half of 2022, driven by higher profitability.

Should you buy Motorola Solutions?

Once the Federal Reserve tames inflation and economic growth reaccelerates, you might be able to find many higher-growth stocks that offer better capital appreciation than Motorola Solutions.

However, if you are a nervous investor who can't sleep at night in this terrible bear market, there are few better investments than this company if you want to safeguard your hard-earned money.