In order to curb soaring inflation, the Federal Reserve embarked on an aggressive path of raising interest rates that started in early 2022. The pace of rate hikes has been the fastest in history, and some market participants are still worried that a recession could be on the horizon, despite the resilient U.S. economy. 

Unemployment is still low, inflation is cooling down, and the labor market is strong. But investors shouldn't rest on their laurels. The best course of action is to prepare for a negative scenario so that your portfolio can be properly positioned. 

When looking at stocks to buy during a recession, the top priority should be financial strength. That's why Apple (AAPL 0.33%) is a no-brainer portfolio addition during economic downturns. Let's take a closer look at the top FAANG stock. 

Apple's strong financial position 

When you're considering which businesses to own during a recession, it's absolutely critical to consider financial strength. Apple is arguably in the best position of any corporation in the world in this regard. As of July 1, the company had a net cash position of $57 billion. 

Moreover, the business produces ridiculous amounts of free cash flow (FCF), which essentially measures the amount of cash profits a company has left over after reinvesting for growth. In fiscal 2022 (ended Sept. 24, 2022), Apple generated $111 billion of FCF, with $90.6 billion produced through the first three quarters of fiscal 2023. 

Why does this favorable financial position matter so much? Well, in a recession, capital markets typically tighten as lenders and investors operate with more rigid standards. And this makes it much more difficult to raise capital at attractive terms in order to fund a company's ongoing operations or growth investments.

Just look at Carvana, which has been dealing with a massive debt burden, forcing management to try and find ways to alleviate the problem. Even though it has restructured some of its debt, the company's long-term survival still isn't guaranteed.

Apple doesn't have to worry about borrowing more money from lenders or issuing new shares to equity investors because it has more existing capital than it knows what to do with. This is beneficial to shareholders because it means the business should have zero problems weathering any prolonged economic downturn.

The iPhone maker has the financial resources to not only survive but thrive. It will be able to play offense and invest in new initiatives, while struggling rivals won't be so fortunate.

Demand trends matter 

Besides wanting to invest in companies that have strong balance sheets and the ability to generate copious amounts of FCF, investors are looking for durable demand. If the business sees customer interest in its products and services tank during a recession, then its revenue and earnings prospects will surely take a hit as well. Plus, resilient consumer demand means that investors don't have to waste one second figuring out what the economy is going to do next because the company should perform well regardless. 

Skeptics could argue that Apple's expensive product offerings (an iPhone 14 Pro and MacBook Pro cost $1,000 or more, for example) will struggle to sell in a recession. That's a fair assessment, but it's worth pointing out that Apple posted double-digit revenue growth during the Great Financial Crisis more than a decade ago. And because Apple customers are generally more affluent than the average consumer, they're better equipped from a financial perspective to continue spending on tech products. 

Additionally, Apple's strong brand will help power it through a recessionary period. It's such an obvious characteristic that it might get overlooked. But people will continue flocking to the newest hardware or software launches that Apple reveals each year and be willing to pay good money for them. This makes the stock a no-brainer buy during a recession.