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You know about socially responsible investing (SRI), where investors steer clear of certain industries -- for example, guns, alcohol, gambling, tobacco, military equipment, and prisons -- on principle, objecting to their role in society. But have you thought of investing in these industries on purpose and adding a sin stock to your portfolio? If so, one you might consider is Diageo plc (NYSE:DEO), one of the world's largest alcoholic-beverage companies.

Investing in a sin stock or two is not such a crazy idea, as long as your values permit it. The USA Mutuals Barrier Investor (VICEX) mutual fund, for example, focuses its assets solely on "sin" stocks, and has outperformed the S&P 500 over the past five and 10 years (though it lags it a bit over the past three). Diageo was recently its 10th-largest holding.

Why might you buy Diageo plc?
Headquartered in London, Diageo was created by the 1997 $37 billion merger between Guinness and Grand Metropolitan. (Several of its brands, though, such as Guinness, date back to the 1700s!)

You might buy Diageo if you like investing in companies that dominate their markets with top-shelf brands that deliver pricing power, among other benefits. Diageo's brands include Johnnie Walker, Crown Royal, JeB, Buchanan's, Windsor and Bushmills whiskies, Smirnoff, Ciroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray, and, of course, Guinness.

But the company isn't standing still with its big brands. It's innovating and introducing new offerings, such as several sour flavors of its Smirnoff vodka (green apple, for example) and "limited edition luxury beers," such as the 1759 Guinness. It's also big enough to fight off many competitive advances, such as when Brown-Forman stirred up legislative and legal dust in Tennessee over rules for whiskies.

You might also favor Diageo if you enjoy receiving dividends. Its dividend recently yielded about 3.8% and the company has been hiking its payout for 15 consecutive years. It's also appealing if you're looking for international holdings. It's a global company, with significant operations and sales in the U.S., too. (It recently broke ground on a $115 million distillery in Kentucky, for example.)

Diageo stumbled in China, buying a premium spirit maker before the government launched an antiextravagance campaign. This put pressure on the company and led to price wars. Political instability in Thailand has also hurt the company's performance. More promising, though, is Diageo's potential in the also vastly populous nation of India, which is a major whisky market, though most of it is produced locally.

Why might you steer clear of Diageo plc? All is not perfect at Diageo, though. In its fiscal 2014 year(ended in June), its earnings dropped 7.6% year over year in local currency, and revenue fell by 9%. The company pointed to difficult economic and retail conditions, especially in emerging markets, as major factors. On the plus side, organic revenue growth was positive everywhere except Western Europe and the Asia Pacific region. But in Asia Pacific, revenue dropped 7%. Overall, sales of wine and spirits outpaced beer, and some wonder whether the company

Investors might also want to hold off on buying into Diageo because of its valuation. The stock is down about 10% over the past year (though it has averaged annual gains of about 11.5% over the past decade), but that doesn't make it a bargain. Its P/E ratio near 20 is above its five-year average of 18.5, and its price-to-sales ratio of 4.4 tops its five-year average (3.6) as well as the industry's current average (3.7). The company carries significant debt, too.

Still, there are reasons to keep Diageo on your radar. Alcohol isn't likely to go out of fashion anytime soon, and Diageo is a huge player in that arena. At a lower price (which would also feature a higher dividend yield), this sin stock would look tasty.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool recommends Diageo (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.