A common image of a savvy investor is one who hunts down hard-to-find pieces of information about companies to cleverly figure out how well they're doing and whether they're worthy of any hard-earned dollars. I can't argue with that approach. It can yield terrific insights. Scuttlebutt is effective.

But you know, there's actually a lot of information about companies that comes right to you in plain sight, as you sit at your kitchen table or lounge in your recliner. I'm talking about annual reports.

We're right in the thick of annual-report season, and those of us without the discipline to keep our holdings down to a manageable and most promising small handful are coming home to new reports in our mailbox day after day after day. Permit me to share some examples of things I've learned from perusing some of mine.

My Johnson & Johnson (NYSE:JNJ) report included a little chart showing that the compound average annual growth rate of J&J over the past decade was 12%, versus 11.7% for the S&P Health Care Equipment Index. The company wants me to be happy I own J&J in that case, but the two returns are so close that it actually makes me wonder whether the index would be better, since it's more diversified. (I think I'll stick with J&J, though, because I still suspect that it will outperform many peers.) Also in this report, I noticed that in the photo of the board of directors, fully four out of the 12 folks pictured were women -- that's a whopping 33%, much more than you'll typically find, and the sign of a progressive-thinking company. Overall, the report was enormously informative and demonstrated the breadth of the firm's achievements and possibilities.

Home Depot
I had to shake my head when perusing my Home Depot (NYSE:HD) annual report. I know the company has had some troubles. The stock has not exactly surged in the past year or two. There has been some management turnover, notably with the CEO leaving. So I wasn't surprised to see the typical bar graphs of sales and earnings on an early page showing flat net earnings growth ($5.8 billion in 2005 and 2006) and earnings per share almost flat ($2.72 in 2005 and $2.79 in 2006). Net sales were up 11%, though, and total assets advanced 18%. But what really raised my eyebrows was that the graphs were positioned at an upward angle, so that even if all the bars in one were the same size, showing no growth, they would look like they were growing, since the one on the far right (for 2006) would be higher than ones to the left. In other words, to this shareholder's eyes, it looks like clever trickery, to a slight degree.

That's not enough to make want to sell, though. I still have high long-term expectations for the company, and since I hope to hold my shares for many years, the long-term results are what really matter to me.

Intuitive Surgical
In contrast to the typical blue-chip company's glossy, full-color annual report, Intuitive Surgical (NASDAQ:ISRG) offered a plain paper report, devoid of color. Still, its contents were quite exciting. (I discovered this company via our Motley Fool Rule Breakers newsletter. Try it for free, and you'll be able to access all past issues and discover many other promising upstarts.)

Intuitive's report led with a quotation from Leonardo da Vinci and quickly moved on to the company's mission -- "to take surgery beyond the limits of the human hand." The company's success in that area was reflected in its numbers: revenue up 64% in 2006 over 2005 and operating income up 93%, excluding a stock option expense. Intuitive launched a new model of its robotic surgery machines, and as it said itself, it became "the new standard in robotic surgery in less than one year, accounting for 87% of the systems sold in 2006 and 94% of the systems sold in the 4th quarter."

One thing that annual reports (specifically, the 10-K reports) include that I always find interesting is a discussion of risk factors that a given company faces. In Intuitive's case, here are a few of the risks disclosed:

  • Customers, anticipating a new product's upcoming release, may postpone purchasing a product, thus depressing sales.
  • If defects are discovered in the products, the firm's reputation will take a hit and hospitals may curtail their orders.
  • The company faces possible liability claims and lawsuits, should things go wrong with any products or in some procedures.

Reading about such risks can help temper overblown enthusiasm for any company.

In sum
These are just three of the annual reports I've received. Stay tuned for another installment of my mail review. If you're interested in any of these companies, I encourage you to seek out their annual reports, read them carefully, and also check out those of their competitors. Lowe's (NYSE:LOW), for example, is raising its market share in a number of product categories and is making its stores more women-friendly while still satisfying professional contractors. (Read Timothy Otte's commentary on Lowe's.) Intuitive's competitors include Boston Scientific (NYSE:BSX), which has recently been getting its act together after acquiring Guidant. (Read Ryan Fuhrmann's view on Boston Scientific.)

In the meantime, if you're looking for some aggressive growers to add to your portfolio, check out our Motley Fool Rule Breakers newsletter. You may find some contenders for your money, as I have -- and at the very least, you'll likely learn about some fascinating new technologies and industries, such as nanotechnology and biotechnology.

Longtime Fool contributor Selena Maranjian owns shares of Johnson & Johnson, Home Depot, and Intuitive Surgical. Home Depot is a Motley Fool Inside Value recommendation. Johnson & Johnson is a Motley Fool Income Investor recommendation. Intuitive Surgical is a Rule Breakers recommendation. Try any one of our investing services free for 30 days. The Motley Fool isFools writing for Fools.