Recession-Resistant Stocks in High-Margin, Network-Driven Industries: Analyzing American Express and Costco's Structural Advantages

In times of macroeconomic stress, investors increasingly seek stocks that can withstand—or even thrive—during downturns. Two such companies, American Express and Costco, exemplify the power of high-margin, network-driven business models. Their structural advantages—rooted in customer loyalty, pricing power, and operational flexibility—make them compelling candidates for defensive investing, even as broader markets falter.

Costco: The Essential Retail Flywheel

Costco's business model is a masterclass in recession resilience. During the 2008 financial crisis, while many retailers saw sales plummet, Costco's revenue grew by 13% year-over-year Costco Business Model During Recession: Tariff-Proof^[6]. This was driven by its focus on essential goods and a membership model that prioritizes retention over acquisition. Even in the 2020 pandemic, when non-essential retail sectors collapsed, Costco's sales surged by $14 billion, fueled by demand for bulk groceries and household staples Pandemic lifts Costco sales but also raises costs by ...^[5].

The company's defensive qualities are underpinned by its 92.7% U.S. and Canadian membership retention rate and 90.2% global retention rate Fear Costco At $980?^[2]. These figures reflect a customer base that views Costco not as a discretionary spend but as a necessity. Moreover, Costco's ability to absorb costs—such as $281 million in pandemic-era safety measures—without sacrificing long-term value underscores its operational discipline Pandemic lifts Costco sales but also raises costs by ...^[5].

American Express: The High-Touch Network Effect

American Express's resilience lies in its dual-sided network of cardholders and merchants. In 2024, the company spent $16.6 billion on cardholder rewards but offset this through merchant fees, which accounted for 69.8% of total revenue Meet the Secret Ingredient That Makes American Express and Costco Recession-Resistant Stocks to Buy Even If the S&P Sells Off in 2026^[1]. This structure creates a flywheel effect: cardholders are incentivized to spend more, while merchants pay a premium for access to a high-spending, low-risk customer base.

During the 2008 crisis, American Express's total revenue rose 3% to $28.4 billion, even as income from continuing operations fell 30% to $2.9 billion American Express 10K 2008 Annual report^[3]. This highlights the company's ability to maintain top-line stability despite macroeconomic headwinds. In 2020, despite a 17% revenue decline to $36.1 billion, Amex remained profitable, posting $3.1 billion in net income by slashing costs and leveraging a reserve release American Express Reports Fourth-Quarter Revenue of $9.4 Billion and Earnings Per Share Of $1.76^[4]. Its 2% net write-off rate, among the lowest in the industry, further demonstrates its risk management prowess Meet the Secret Ingredient That Makes American Express and Costco Recession-Resistant Stocks to Buy Even If the S&P Sells Off in 2026^[1].

Structural Advantages in a Downturn

Both companies benefit from high switching costs and network effects. Costco's members are locked in by the value of bulk purchases and exclusive services, while American Express's cardholders are drawn to premium rewards and elite customer service. These moats are reinforced by demographic trends: Amex's ability to attract millennials and Gen Z despite higher fees Meet the Secret Ingredient That Makes American Express and Costco Recession-Resistant Stocks to Buy Even If the S&P Sells Off in 2026^[1], and Costco's appeal to budget-conscious households during inflationary periods.

Critically, their models are capital-efficient. Costco's low inventory turnover (due to bulk sales) and Amex's fee-based revenue reduce exposure to liquidity shocks. During the 2020 pandemic, Amex cut expenses by $4.5 billion, a move that preserved margins without eroding long-term growth American Express Reports Fourth-Quarter Revenue of $9.4 Billion and Earnings Per Share Of $1.76^[4].

Conclusion: Defensive Investing in a Networked World

For investors, the lesson is clear: companies with high-margin, network-driven models can outperform in downturns. Costco's essential retail model and Amex's premium payment network are not just recession-resistant but recession-beneficiaries in certain scenarios. While neither is immune to prolonged economic collapse, their structural advantages—customer retention, pricing power, and operational flexibility—make them standout choices for portfolios seeking stability.

As the economy navigates uncertainty, these two exemplify how strategic positioning and business model design can turn macroeconomic headwinds into tailwinds.