US Treasuries, the US dollar and, ironically, gold on one side, everything else on the other: That’s the way global financial markets are trading here in late 2009, just as they have since the fall of Lehman Brothers in September 2008.

Lehman’s fall was the catalyst for last year’s great crash. Its demise also corresponds to the day with the launch of this service. But despite that rather inauspicious beginning, Portfolio 2020 holdings are up an average of 36.7 percent.

The return is well over 50 percent including currency gains from non-US selections and the sales made over that time. Meanwhile, the S&P 500 and Dow Jones Industrial Average, despite a mighty recovery, are still down a little less than 10 percent over that time. The Nasdaq is close to flat.

Why such a wide outperformance? The biggest reason is we focus on businesses first. Some of our selections held their own in the market last year. However, others were deeply in the red at the nadir and would have been easy to give up on.

American Superconductor (NSDQ: AMSC), for example, hit a low of less than USD10 a share in late November. At that point, we were down half of our position, a point at which in a normal market we would have been long gone.

American Superconductor’s plunge, however, had nothing to do with the health of its underlying business, which was still running strong on orders from China and the US Dept of Defense. More important, its technologies and products looked more wired in than ever to growth in the energy business, enabling it to transcend any downturn that followed the market crash.

The upshot: We decided to stick as long as American Superconductor’s business stayed strong, even while so many others obviously weren’t. It wasn’t an easy decision, and there were plenty of misgivings. But eventually the market recovered, and American Superconductor has become a big winner, roughly quadrupling off its lows.

The key to American Superconductor’s recovery was its business and the fact that the trends it’s tapped into transcend current market and economic woes.

That’s the common thread for the rest of Portfolio 2020, as well as every company we bring to your attention.

Meet Portfolio2020

Below, I briefly review all 19 of our current holdings, where they stand and what to do now. Note that we divide holdings into four groups.

Beyond Our Borders and Red, White and Blue list major companies domiciled outside and inside the US, respectively, that were leaders in the 20th century and are still on top now.

What sets them off from other large outfits is they’re positioned to take that dominance well into the 21st century. Not only are all of them exceedingly healthy–evidenced by solid third quarter 2009 earnings–but they’ve tapped into trends that will keep them on top. These are the bedrock stocks of Portfolio 2020, and they’re where the bulk of your investment should go.

In contrast, Cutting Edge Tech and Metals and Materials are places to go for more explosive returns, at the cost of somewhat more risk.

In the case of Cutting Edge Tech, these are smaller companies whose success depends on developing revolutionary processes and technologies and getting them to market. That’s a tough proposition but ultimately an extremely rewarding one–as early investors in Apple (NSDQ: AAPL) will no doubt attest.

Metals and Materials, meanwhile, are extremely cheap as the global economy works to find its footing. Our picks are large companies that are never in danger of going belly-up. But their earnings and share prices are extremely volatile.

Here’s the roundup.

Beyond Our Borders

Alstom’s (Paris: ALO, OTC: AOMFF) third-quarter results were roughly in line with the estimates of the 35 major research houses that cover it globally.

The French engineering company has its hands in a wide range of 21st century technologies from smart grid to high-speed trains, and a blue chip client list that rivals any in the world.

What’s really attracted us to it is its carbon sequestration technology for power plants that continues to move toward commercial availability by 2015. That will basically solve carbon regulation problems for companies worldwide.

The stock is up nicely this year on improved hopes for global growth. But selling at just 75 percent of sales, there’s a lot more to go. And priced in Euros, the stock is a US dollar hedge as well. Buy Alstom up to USD75.

BASF (Germany: BAS, OTC: BASFY) is a German chemicals giant whose roots in its industry run just as deeply as Alstom’s. While it also produces oil and gas, the company’s primary mission has always been to mix and match raw materials to produce the most efficient solutions for customers.

Heavy exposure to industry has been a drag on earnings the past couple years, but the third quarter marked definite improvement on the second quarter of 2009, a sign of better times ahead. The company’s greatest growth potential is taking its business to developing Asia, which it advanced with the recent acquisition of Ciba. Priced in euros, BASF is a dollar hedge and a buy up to USD65.

China High Speed Transmission (Hong Kong: 658, OTC: CHSTF) is a direct play on the rapid growth of wind power in China, the world’s fastest-growing economy.

The country’s plans for expanding wind power coupled with local content rules on equipment for turbines have launched the company on a profit wave that shows no sign of cresting yet. The government has raised 2020 renewable targets to 17 percent of installed capacity, and developers are crowding for contracts.

Shares are best purchased in Hong Kong but also available on the US over-the-counter (OTC) market under the symbol CHSTF. Buy up to USD3.

China Resource Power (Hong Kong: 836, OTC: CRPJF) is a bet on China’s increasing need for electricity in coming years, probably close to the world’s safest bet.

The company’s net power generation rose 28 percent in October from year-earlier levels on a combination of new capacity and acquisitions, a massive acceleration from the already robust 11 percent growth of the first 10 months of the year.

Like China High Speed, Resource Power is best purchased in Hong Kong. But US investors can also buy on the OTC market under the symbol CRPJF. Buy up to USD2.50.

Electricite de France (Paris: EDF, OTC: ECIFF) is the world’s leading producer of carbon-neutral energy, and it continues to get larger. This month the company won regulatory approval for a deal that will give it a 49.99 percent stake in five nuclear reactors operated by Constellation Energy (NYSE: CEG) in the US, with plans to potentially operate five more.

This follows its recent moves to buy nuclear capacity in the US and elsewhere in Europe, including a deal with Italy’s Enel (OTC: ESOCF) to construct new plants in that country. Electricite de France is a buy up to USD70.

Emera (Toronto Stock Exchange: EMA, OTC: EMRAF) owns and operates regulated utilities, fuel delivery and natural gas transmission throughout Canada. It’s also the world’s leading developer of tidal energy, via a project in Nova Scotia’s Bay of Fundy.

The players are Emera’s Nova Scotia Power unit and Ireland’s Open Hydro, of which Emera owns 10 percent. The Bay of Fundy facility has now successfully installed its first advanced turbine, with plans for more.

Emera pays a solid dividend and is a buy up to USD25.

Hyflux Water Trust (OTC: HXWTF) is a blue-chip play on the world’s growing shortage of safe drinking water supplies. Its primary assets are water and wastewater treatment plants in particularly parched areas of China, India, the Middle East and North Africa.

The yield of nearly 7 percent is financed from fees from these projects but leaves plenty for growth for operating company Hyflux. Buy Hyflux Water Trust up to USD1.50.

Red, White and Blue

AES Corp’s (NYSE: AES) worth was verified earlier this month when China Investment Corp, the world’s leading sovereign wealth fund, bought 15 percent of its shares.

The deal should help AES expand its wind and solar projects in that country and provides cash to fund extremely aggressive capital spending over the next five years. Third quarter earnings were up strong and there’s a lot more ahead. Buy AES Corp up to USD15.

Hewlett-Packard Company (NYSE: HPQ) may not measure up to Apple in the eyes of US consumers. But if fiscal fourth quarter 2009 earnings are any guide, it’s well ahead in what’s likely to become the world’s leading computer market, China.

The company gets 64 percent of its revenue from outside the US, and in China rose 20 percent during the quarter. This, coupled with a strong reputation for quality and efficiency, continue to serve the company well and put it head and shoulders ahead of US and global rivals. Buy Hewlett-Packard Company up to USD47.

Insituform Technologies (NASDQ: INSU) is in prime position to capitalize on deteriorating water and waste water pipeline infrastructure, a growing problem in developing and developed countries alike.

It’s also finding a willing market in major energy projects, including oil pipelines. The product is its trenchless repair process, which enables pipes to be repaired without digging them up. And the market is only just beginning to flower. Buy Insituform Technologies up to USD22.

Itron (NSDQ: ITRI) is the leading maker of smart meters, the installation of which is the first step in upgrading power grids.

Smart meters enable customers and utilities to better manage power usage and thereby make better decisions. And they enjoy enormous political support, evidenced by the billions in federal stimulus grants and rate increases granted to finance them.

Despite lingering impact on orders from last year’s credit freeze, Itron posted solid third quarter numbers and appears on track for more ahead. Buy Itron up to USD63.

Kinder Morgan Energy Partners LP’s (NYSE: KMP) growth formula is basically to acquire and build energy infrastructure that generates fees regardless of what happens to energy prices. As a limited partnership, it then passes the bulk of this income on to unitholders as hefty and growing distributions.

One area of asset growth is pipelines to transport and store carbon dioxide (CO₂) for use in oil wells. This would become a much bigger business if CO₂ regulation is eventually passed. In the meantime, Kinder Morgan Energy Partners LP is a buy up to USD60.

Ormat Technologies (NYSE: ORA) continues to expand its portfolio of geothermal power plants via its own profit formula: Not only does it build facilities using its own proprietary technology, but it then typically operates them for a fee once they’re open.

The company inked a new 20-year power purchase deal with the Nevada Power unit of NVE Energy (NYSE: NVE) this month and should have many more agreements in the future given aggressive state mandates for renewable energy. Buy Ormat Technologies up to USD40.

Cutting Edge Tech

AeroVironment (NSDQ: AVAV) took a steep dive after our initial recommendation in the wake of the market’s late 2008 meltdown. Since then, however, it’s come roaring back, mainly because its defense contracts and unmanned aircraft technology continue to expand their promise.

The technology has become particularly important for US military efforts to stabilize Afghanistan, a situation that appears unlikely to be resolved soon. AeroVironment is a buy up to USD30.

American Superconductor (NSDQ: AMSC) may have turned a corner in the US this fall by signing a contract to link three separately run power grids in Texas. That promises to at last diversify its business beyond the Pentagon and China’s wind power efforts to finally introduce superconductor use in the power industry.

The stock’s come a long way but the promise is for a lot more. It’s a buy up to USD31 for those who don’t already own it.

Qualcomm (NSDQ: QCOM) isn’t the same stock it was 10 years ago, when some investors predicted it would hit USD1,000. But the company is definitely in a far more secure position as it continues to ride the torrid growth of the wireless industry globally, and particularly data applications.

We’re still basically flat from our August entry point. But with earnings on the right track and a long-standing dispute with the EU now dropped, the stock looks promising. Buy Qualcomm up to USD48.

QinetiQ (London: QQ, OTC: QNTQY) may seem like science fiction to some. But the company’s product line–which ranges from solar powered unmanned aerial systems to “Dragon Runner” robots–is all the rage in defense industry circles.

And the company, formed from the British government’s defense research and development organization, is finding itself more in the spotlight than ever, given the needs of the war in Afghanistan. That should mean good things for the stock going forward. Buy QinetiQ up to USD12.

Metals and Materials

BHP Billiton (NYSE: BHP) is the resources company best positioned to serve the exploding markets of developing Asia. It’s also extremely profitable and, despite a big run this year, the stock is still well below its 2008 highs.

Iron ore, copper, titanium, ferroalloys, nickel and fossil fuels will only be in more demand going forward. Buy BHP Billiton up to USD70.

Vale (NYSE: VALE) enjoys the full support of its home government in Brazil. That’s basically the key requirement for shareholders to benefit from its sales of everything from the world’s highest-quality iron ore to copper, aluminum and potash.

The stock is even more deeply discounted than BHP to its 2008 high. Buy Vale up to USD25.