Procter & Gamble (PG -0.52%) investors don't fear a recession as much as owners of other companies might. The consumer staples giant owns dozens of brands in essential categories, like hair care and laundry detergent, that don't tend to decline when economies tighten.

That's one of the many reasons why P&G stock is often seen as an attractive holding during turbulent times. But P&G is barely beating the market so far in 2022 and roughly matching the performance of its peer Kimberly Clark, which isn't nearly as profitable.

With that in mind, let's look at a key reason for optimism about P&G's stock, along with one factor that should have investors worried.

The green flag: Cash flow

P&G has enjoyed strong sales growth through most of the pandemic, yet shareholders are prepared for a temporary pause to those boom times. You can already see evidence of the stress on its business from inflation and reduced spending in its latest earnings report.

Revenue growth in the second-quarter period that ended in late June came entirely from rising prices, for example, as sales volumes declined .

But P&G's finances continued to set it apart from Kimberly Clark and from most other consumer-focused businesses. Operating profit margin held steady despite soaring expenses.

Yet the bigger positive sign is cash flow. P&G converted a full 93% of its fiscal 2022 earnings into free cash flow and is targeting over 90% conversion in the year ahead.

That success is only possible thanks to its unique operating scale and efficiencies. It provides management with flexibility to weather any financial pullback, too, and to continue raising that dividend even if sales take a temporary turn lower.

The red flag: Falling volumes

Consumers flocked toward Procter & Gamble's products during earlier phases of the pandemic, as they stocked up on essentials during lockdowns. However, they went on to splurge on premium products in the flush spending environment that followed.

The latter factor will likely reverse itself somewhat over the next few quarters. Sure, P&G competes on the value side of a few niches, but its products typically command a high premium in areas like laundry detergent, paper towels, and skin care. That focus paid dividends when consumers were looking to upgrade, but it could mean relatively weak growth during any recession.

None of P&G's five core business units achieved higher sales volumes this past quarter. The grooming segment shrank by 3%; beauty and fabric care each fell by 1%; and the healthcare and baby care divisions were flat. These numbers will likely get worse before they get better, especially as P&G rolls out price increases over the next few quarters.

It is hard to raise prices in any environment, but this latest round of increases heightens the risk of more consumers choosing competing brands as shoppers look to save cash.

The bigger picture

P&G's extra exposure to that risk helps explain why the stock isn't trouncing the market so far this year. But it isn't a thesis-busting challenge.

The company will likely return to its normal pattern of steady sales-volume growth after an adjustment period. In the meantime, shareholders can collect a dividend that they can count on.

P&G has raised that payout in each of the last 66 years, after all. While no business is immune to an economic downturn, P&G should sail through any slump as it has for the past several decades. Those factors make it an attractive stock today despite a few big pressures on its short-term growth prospects.