On Thursday, Safeway (NYSE:SWY) — operator of supermarket brands like Vons, Randalls, Tom Thumb, Genuardi’s and Carrs — reported a rise in earnings but expects weak results next year because of the moribund U.S. economy. This suggests that if you’re shopping for supermarket equities, you might be better off buying in the premium aisle where the well-off shop. So should you be investing in a company like Whole Foods (NASDAQ:WFM) instead?

Despite the gloomy outlook, Safeway beat expectations. Safeway reported $130.2 million in net income, up 6% from the year before, while its 38-cents-per-share earnings beat expectations by three cents. And Safeway revenues climbed 7.1% to $10.06 billion, 2% higher than analysts polled by Thomson Reuters had forecast.

Safeway CEO Steve Burd told Dow Jones Newswires that high-income consumers are spending as much as ever, but most shoppers remain very price-conscious — a trend that Burd expects will continue for the next year. Nevertheless, Burd noted that Safeway’s same-store sales rose 2% during the most recent six weeks.

Whole Foods is doing much better than Safeway. When it last reported earnings for its second quarter in July, Whole Foods reported a 35% jump in earnings and raised its forecast for the rest of 2011. Its $88.5 million in second-quarter earnings were up 35%; its revenues climbed 11% to $2.4 billion, and its EPS of 50 cents per share were three cents better than expected.

What’s behind the better-than-industry-average performance at Whole Foods? It has revamped its product line so people perceive its prices as being lower. While that move might have drawn consumers back to its stores, Whole Foods’ affluent customers appear willing to pay the higher prices the grocer is charging to hold its profit margins as the cost of goods sold goes up. Demand is so high that Whole Foods is adding to its 309 stores in the U.S., U.K. and Canada.

So does this mean you should shun Safeway stock and invest in Whole Foods? Actually, I’d avoid them both. Here’s why:

• Whole Foods: Fast-growing, decently profitable company; expensive stock. Whole Foods revenues increased 12.1% to $9.9 billion in the last year, while its net income soared 102% to $325 million — yielding a slim 3.3% net profit margin. But its price/earnings-to-growth ratio is a pricey 2.17 (where a PEG of 1.0 is considered fairly valued) with a P/E of 36.8 on earnings forecast to grow 17% to $2.25 in fiscal 2012.
• Safeway: Barely growing, thinly profitable company; pricey stock. Safeway revenues are up 0.5% in the last year to $42.8 billion, and its net income soared 154% to $531 million — it earned a slimmer 1.2% net profit margin. And its PEG is an overvalued 1.35 on a P/E of 12.6 with earnings forecast to grow 9.3% to $1.85 in 2012.

Even if Whole Foods maintained a 35% earnings growth rate, it still would not be a bargain at its current P/E. And Safeway’s slim margins and slow growth make it hard to like — even with single-digit P/E.

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