As the economy recedes, Americans are cutting back on $5 lattes but still need to satisfy their caffeine addictions. As a result, Green Mountain Coffee Roasters (GMCR) (Stock Quote: GMCR) stands to benefit from a trade-down effect as consumers seek cheaper, but flavorful, coffee. The loser? Starbucks (Stock Quote: SBUX) (SBUX) - Get Report .

(GMCR) (SBUX) - Get Report Ratings expects "buy"-rated Green Mountain to extend its strong performance this year and outperform "hold"-rated Starbucks, in addition to food-products competitors including "sell"-rated Smithfield Foods (SFD) (Stock Quote: SFD), as well as Sanderson Farms (SAFM) - Get Report (Stock Quote: SAFM) (GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report , Hain Celestial (HAIN) - Get Report (Stock Quote: HAIN) (GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report and Del Monte Foods (Stock Quote: DLM) (GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) , all of which are rated "hold."

Green Mountain's fiscal first-quarter results trounced estimates. Revenue jumped 55.8% to $197 million, and net income rose five-fold to $14.38 million. The Waterbury, Vt., company has posted year-over-year earnings per share growth for eight consecutive quarters, but the latest increase, from 12 cents per share to 56 cents per share, indicates a dramatic surge in profit. Starbucks, in contrast, reported that revenue in the three months through December fell six percent to $2.6 billion, and net income plunged 69% to $64.3 million.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) Green Mountain has not held on to much cash. Its quick ratio fell to 0.79 in the latest quarter, indicating a subpar liquidity position. The debt-to-capital ratio fell to 0.36 from 0.50, demonstrating an improved capital structure. The company recently won a patent-litigation suit against Kraft (KFT) (Stock Quote: KFT) and used a sizable portion of the $17 million settlement to decrease its long-term debt.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) (KFT) Green Mountain purchased Keurig, a maker of instant-coffee brewers, for $104.3 million in 2006. Green Mountain sells the Keurig brewers to homes and offices, and tacks on an initial supply of K-Cups, the single-serving instant-coffee packs. When customers run low on K-Cups, they put in another order. Keurig shipped 357 million K-Cups during the first quarter, a 55% increase from a year earlier. More importantly, Keurig brewer sales more than doubled to 711,000 units. K-Cups are sold at a reasonable markup, whereas the brewers are sold, according to the company, "practically at cost." Consequently, the road ahead should be rife with profits as recent brewer purchasers deplete their initial supply of K-Cups and need to reorder.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) (KFT) Green Mountain's stock, which trades on the Nasdaq, has risen 16% over the past six months and 9% in a year. Starbucks' stock has declined 33% in the past six months and 44% over 12 months. Looking at peer valuation in the food-products industry, Green Mountain's shares are expensive based on price to book, price to cash flow, price to earnings and price to sales. Nevertheless, the stock is well below its 52-week high of $44.75 and may have upward momentum if the company continues its strong performance in the fiscal second quarter.

There are few companies that are increasing earnings in the current economic environment, which makes GMCR attractive. Our quantitative model evaluates about 5,300 publicly traded companies and gives only 9.15% of them "buy" recommendations. GMCR has held that rating since May 15, but recently jumped into our top 100. The company has a market capitalization of $944.9 million, average daily trading volume of more than 500,000 shares, and a beta of 0.79, indicating strong stock-market correlation. Green Mountain does not pay dividends.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) (KFT) GMCR has grown from a café in rural Vermont into a major player in the Northeast food-products market. The company purchased Tully's Coffee in September and now has an established position on the West Coast. GMCR's multi-channel distribution strategy is ideal for developing brand awareness -- people see the coffee in offices, homes and the supermarket. Because many coffee drinkers have a brand preference, this increases the likelihood that the company will develop a loyal customer base.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) (KFT) Although reputable competitors such as Dunkin' Donuts and Starbucks present a legitimate threat to growth potential, Green Mountain is positioned to gain market share during the recession because it doesn't operate stores and its products are convenient and affordable. After all, it's a heck of a lot easier to drink free coffee at the office than it is to walk down the street to Starbucks and shell out cash for overpriced joe.

(GMCR) (SBUX) - Get Report (SFD) (SAFM) - Get Report (HAIN) - Get Report (DLM) (KFT) Research analysts are bullish on the stock. GMCR is covered by eight sell-side firms and receives five "buys," two "holds," and one "sell." As an added bonus, Green Mountain has received consistent accolades for its commitment to responsible corporate citizenship. The company donates at least five percent of pretax profits to social or environmental causes, so good karma comes with each K-Cup. There are few stocks right now that merit attention, but GMCR is worth consideration. This company is selling coffee with character and turning a solid profit. As always, consider macroeconomic and idiosyncratic risk before investing.