There’s no doubt that the U.S. economy is growing slowly — the question for investors is whether that’s a problem that hurts all office supply companies equally or whether some are better able to adapt than others.

A case in point is Office Depot (NYSE:ODP) — it reported earnings Tuesday and they were to weaker than expected. The office supply retailer is not adapting well to the slow economy. Is Staples (NASDAQ:SPLS) better positioned?

Office Depot had a poor second-quarter report, and its third quarter was down from the year before and worse than expected. Specifically, Zacks expected EPS of two cents per share on revenue of $2.9 billion for the third quarter — it earned three cents per share the year before.

On Tuesday, ODP reported no profit at all after adjustments. But it used one-time gains to report $101 million in profit on a 2% drop in sales that was around $100 million less than expected. Absent one-time items such as a $99 million reversal of “combined tax and interest accruals for uncertain tax positions” in the quarter, Office Depot’s adjusted EPS was 0.

In the second quarter, ODP lost six cents per share, which was better than the 2010 Q2’s loss of nine cents per share and analysts’ estimate of 12 cents per share.

But Office Depot missed revenue expectations of $2.73 billion by about $20 million and generated negative free cash flow of $85 million — around $25 million worse than the year before.

Not surprisingly, Office Depot is responding by taking the usual restructuring steps. It’s cutting costs, closing money-losing stores, taking more expensive items out of inventory and closing distribution facilities with operating slack.

But Staples has bucked this negative trend and traders are betting on a big rebound in its stock. For example, Bloomberg reports that its 2011 back-to-school sales were up over 2010 and it has been able to pass higher prices on to customers. CEO Ron Sargent also told a September 2011 conference that he “expects more mergers and acquisitions in the industry.”

Staples has been adding electronics and products that appeal to women. For example, Staples sells Amazon (NASDAQ:AMZN) Kindle digital readers, and it partnered with Martha Stewart to offer home office items targeted at women, who account for 60% of in-store customers.

And bullish bets on Staples stock are high. The ratio of bets on a rise in the price — known as “calls,” which give investors the right, but not the obligation, to buy shares at a specific price and time — to bets on the price falling (“puts”) is at 3.01. This is close to the highest level of bullishness on Staples since June 2003.

So should you buy Staples and avoid Office Depot? Definitely. here’s why:

• Office Depot: Shrinking sales and losing money; very cheap stock. Revenues for ODP have dropped 4.2% to $11.5 billion in the past 12 months, while net income has climbed 87% due to a smaller loss of $121 million. Meanwhile, Office Depot’s price/earnings-to-growth ratio is a very inexpensive 0.02 (where a PEG of 1.0 is considered fairly priced) on a forward P/E of 15.9 and expected earnings growth of 1,030% to 16 cents in 2012.
• Staples: Slow sales growth and small margins; but fairly priced stock. SPLS’ sales have inched up 1.1% to $25 billion in the past 12 months, while net income has climbed 19.4% to $938 million — creating a slim 3.76% net profit margin. Staples’ PEG of 1.02 is fairly priced on a P/E of 11.61 and expected earnings growth of 11.3% to $1.57 in 2012.

Staples is doing better in an industry that is suffering in the economic doldrums. And it looks like Office Depot is a sitting duck — possibly resulting in its acquisition by Staples. If that happened, ODP stock would rise. If not, it will keep dropping — I am not sure those 2012 earnings growth numbers can be achieved — while SPLS stock could rise if the bulls are right.

As of this writing, Peter Cohan did not own a position in any of the aforementioned stocks.