Many of us are attracted to growth stocks, and on the surface, Monsanto (NYSE: MON) certainly looks like one. Judging by its last quarter (and lots of other Foolish coverage over the last year or so) one can see that many things seem to be going right for Monsanto. However, what price are you willing to pay for growth? Are the profits worth the risks -- and the possible long-term ramifications -- for both investors and consumers? Monsanto's success hasn't come without controversy, and more is likely to come.

Scary stories

One of the things that first appealed to me about investing was that there was always a story behind the numbers. And Monsanto has an interesting one -- indeed, some might call it frightening. Now, I'm a big fan of scary stories like The Shining, but I'm not so big on them when it comes to investing.

The controversies of bygone days still haunt Monsanto. For example, in 1984, Monsanto and Dow Chemical (NYSE: DOW) agreed to pay a $180 million settlement to American Vietnam War veterans who complained of long-lasting physical effects from the use of Agent Orange. The two companies were the largest producers of the pesticide-turned-chemical-warfare agent. However, the controversy is still noted in Monsanto's SEC filings -- Vietnamese and Korean lawsuits have also been filed, and while most have been dismissed, in January 2006, the Seoul High Court ordered that Monsanto and Dow Chemical pay $62 million in compensation to approximately 6,800 people. The plaintiffs may still appeal. (Two lawsuits originally filed in 1999 sought more than $4 billion in damages from the companies.)

Granted, the Monsanto of today is a bit different than the Monsanto of yesterday. Its pharmaceutical business, Pharmacia, is now part of Pfizer (NYSE: PFE), and its chemicals business was spun off as Solutia. (You can read this article for details on how Monsanto and Solutia share a legacy -- and payments -- regarding environmental remediation related to PCB pollution, an ongoing issue.) Today's Monsanto comprises the agricultural business alone.

The split didn't free Monsanto from controversy, though. Note its major products: genetically modified (GM) herbicides and seeds. Such products are touted as increasing agricultural productivity and yields. Some say such solutions from companies like Monsanto will feed the world. However, if you ask some farmers and most environmentalists, you'll get a different story.

Turf wars

Monsanto, with its annual revenues approaching $7 billion, is embroiled in quite a few lawsuits -- it takes quite some time to read through them all in regulatory filings. Recently, it agreed to pay $100 million in royalties to the University of California, which claimed Monsanto violated its patent on bovine somatotropin, or Posilac, a hormone that increases milk production in cows. Furthermore, 90 Texas farmers recently alleged that Monsanto failed to warn them about a defect in its GM cotton product, resulting in widespread crop loss.

Monsanto's most obvious controversy is the GM hot button, though. A group of farmers, consumers, and environmentalists recently sued the U.S. Dept. of Agriculture, alleging that it is improperly allowing Monsanto to sell an herbicide-resistant alfalfa seed without examining the health, environmental, and economic ramifications.

Monsanto isn't just the defendant in many lawsuits. Part of its business is being the plaintiff as well. For example, GM alfalfa is expected to easily contaminate old-school alfalfa crops, which could result in Monsanto lawsuits against farmers for royalties if traces of its own patented GM alfalfa get into such farmers' crops by accident. Alfalfa is apparently easily cross-pollinated by bees and wind. That seems not only an ethical issue, but an antitrust issue as well, to my way of thinking. Many farmers and environmentalists contend that Monsanto is gearing up to have an agricultural monopoly, and they've filed suits related to antitrust issues.

Furthermore, many people are still unconvinced that GM products like Monsanto's won't end up being harmful to human health or the environment in the long run.

"Frankenfood"-Free Europe?

The European Union has had a long-standing reluctance to approve GM products, and many companies, including Monsanto, have been fighting to get GM wares into the European market.

The World Trade Organization recently made a preliminary ruling against the EU, which may eventually force a more open approach to GM foods. (The EU has been approving the products on a case-by-case basis, requiring labeling and traceability.) The EU's stance is logical: A 2005 poll showed that 54% of Europeans believe GM foods are dangerous.

Their concern isn't surprising, given food-supply health and safety issues in recent years. Consider the BSE (bovine spongiform encephalopathy, or mad cow disease) situation. The adverse effects of using meat and bone materials in animal feed weren't known for many years, until mad cow disease emerged and made the leap to human infections, known as variant Creutzfeldt-Jakob disease.

GM products are alive and well in the U.S., though. Monsanto has a cache of high-profile food company customers here -- for example, Kellogg (NYSE: K), which now uses Monsanto's Vistive to lower the trans-fat and saturated fat content of certain foods -- and since there are no labeling requirements, many Americans are eating GM foods whether they know it or not.

Some companies have made such concern into big business. Whole Foods Market (Nasdaq: WFMI) has been a major advocate of clear GM labeling, and it doesn't stock GM foods (bear in mind that organic food is understood to be GM-free). In fact, Whole Foods' stance on environmental matters is probably one of its biggest selling points with its customers.

GM fans may say that the detractors are exhibiting fearmongering and junk science, holding back progress, or ignoring the needs of the hungry in a world where populations continue to grow. On the other hand, as recently as last December, the U.S. Department of Agriculture's own inspector general charged that the agency has failed to do a good enough job in regulating field trials of GM crops.

What keeps you up at night?

I know one should avoid being an emotional investor. I also know that some people make a pretty penny by investing in companies that others find unpalatable. Take Altria (NYSE: MO), for example. It's certainly got some unsavory elements, given its addictive -- and unhealthy -- cash cow of a product, but its returns have made it one of the most remarkable stocks in history.

I like to consider myself a socially responsible investor. In that regard, Monsanto isn't a stock that I'd ever consider owning, regardless of the growth potential. There's just too much bad mojo, in my opinion. (I could go on about the bad mojo, but I've got a word count limit.) I believe that there are certain situations where the question isn't whether one can do it, but whether one should do it, and that goes for corporations as well. Such considerations influence my investing decisions.

Ethical discussions aside, though, this stock doesn't look like a bargain to me, given the risks. Check out this chart* to see Monsanto's five-year trajectory. Just for starters, Monsanto shares trade at a trailing P/E ratio of 63, despite sales and earnings growth that is expected to slow somewhat in the next three years. Meanwhile, insiders have been selling shares at a rapid clip recently, which could indicate that they believe the stock is nearing its apex. All things considered -- particularly given the risks at hand -- Monsanto could leave a bad taste in investors' mouths.

chart showing Monsanto's five-year trajectory:
http://quote.fool.com/chart.aspx?s=MON&t=5y&l=off&q=l&c=%5eGSPC