Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try to fix it

Most investors – including myself – lost money Diageo stocks in recent years. Over one year, the beverage giant’s share price has fallen by nearly 30%, while over five, it has fallen by more than 50%.

Now, Diageo’s shares may rise again over time, enabling investors to make up for their losses. However, it is worth remembering that when it comes to making losses in the stock market, we don’t have to do it with the same stocks that we lost money on.

Growing while Diageo is shrinking

This brings me to FTSE 250 stock Applied Nutrition (LSE: APN). It is a leading supplier of nutritional supplements.

I think this stock would be a good way to try to make up for losses from Diageo. Because the way I see it, this company is very different.

While Diageo sells alcohol, whose sales are declining as younger generations drink and those who use weight loss drugs drink less, Applied Nutrition sells protein powders and hydration solutions, which are growing as consumers spend their money on products designed to make them feel healthy and look good (social media is helping to drive this trend).

So unlike Diageo, it is positioned in the fast-growing consumer goods industry (the company expects its market to grow by around 8% per year between now and 2028).

“As health and wellness become more and more central to everyday consumer behavior, we continue to benefit from a large group of people who are starting, or continuing their health journey.”

Applied Nutrition Founder and CEO Thomas Ryder

We can see this in its sales prices and shares. For the six-month period ended 31 January, Applied Nutrition’s sales rose 57% year-on-year (Diageo reported net sales growth of -4% for the six-month period ended 31 December), while over the year, its share price rose nearly 90% (compared to Diageo’s 30%, as noted above).

Strong funds and low prices

Looking beyond the favorable theme background and impressive revenue growth rate, there are a few things to like about Applied Nutrition from an investment perspective. One is to count.

With analysts expecting earnings per share of 12.5p for the year to 1 August, the forward price-to-earnings (P/E) ratio is just 17.5. That’s low given the rate of top-line growth.

Another thing you may like is finances. Not only does the company have a very strong balance sheet (at the end of January it had a net income of £25.4m) but it also has a very high return on capital – last year it was 49%.

This company is also trusted, which is important, because it operates in a competitive industry where there are many different products (and competition from competitors is dangerous).

Finally, it has a very efficient business-to-business (B2B) model, selling its goods through established retailers such as Tesco, Asdaagain Amazon. This is a cost-effective way to gain access to a wider range of customers and expand into new local markets and should help the company grow over time.

Overall, there’s a lot to like. Although competition and weak consumer spending are risks, I think this stock has all the right ingredients to be an excellent long-term investment and is worth considering with an ISA or Self-Invested Personal Pension (SIPP).