Our strategy at Portfolio 2020 is to recommend companies that are squarely positioned to capitalize on long-term trends that transcend the ups and downs of the economy.  The model Portfolios’ current holdings hail from 10 countries including the US, span more than 20 industry sectors and range from rock-solid, consistent dividend payers in infrastructure-based industries to high-tech companies with true 10-for-1 potential.

We usually hold stocks as long as the company is building wealth and becoming a more valuable business. But we do take profits when the gains outstrip growth prospects. And we also liquidate positions when a company’s underlying business loses its way.

Happily, the latter hasn’t happened too often in Portfolio 2020’s history. The product’s launch date was a big part of that success, entering the market the week Lehman Brothers declared bankruptcy. It’s one thing to recommend stocks in good times when everything is on the upswing, but constructing a portfolio in one of the worst bear markets in recent history is a daunting challenge.

We had an opportunity to put our investment theses up against the ultimate test: the worst market, economic and credit environment in decades. The names in our portfolio have endured the mother of all stress tests, but we continue to monitor their business prospects to ensure they remain on course.

At this juncture, all of our Portfolio recommendations have announced fourth-quarter and full-year results. Here’s a brief recap, by our four Portfolio sections.

In general, conservative investors should focus on the stocks listed in Beyond our Borders Portfolio and Red, White and Blue Portfolio. Stocks in the Cutting Edge Tech Portfolio offer high potential rewards, but the risks to capital preservation are also above average.

Meanwhile, names in the Metals and Materials Portfolio are deep value plays now and represent a long-term bet on rising demand and shrinking supply. Investors who establish positions in these stocks should expect volatility. We are also likely to take profits in this group, should individual stocks get ahead of themselves.

Beyond Our Borders

These are dominant companies headquartered outside the US that are positioned to stay on top. Our goal is to build wealth as they grow earnings over the coming years. They’re generally solid enough for conservative investors, but offer potentially explosive growth. We recommend that investors purchase these stocks on their home markets, but these names can also be picked up in the US on the over-the-counter market.

Alstom (France: ALO, OTC: AOMFF) has a position in major energy, water and transportation projects worldwide. The firm has benefited from increased government spending on infrastructure–for example, it won a bid for an Amsterdam metro contract this month–which has offset some of the shortfall in the private sector. Management reported that sales rose 3 percent in the company’s most recent quarterly results. Projects in carbon dioxide removal from coal-fired power plant emissions are particularly promising. The stock has unwound some of our gains but still trades higher than our entry price. Alstom is a solid buy up to EUR55 (USD75) in the local market.

BASF’s (Germany: BAS, OTC: BASFY) earnings also dipped due to economic weakness, as demand for chemicals from heavy industry took a hit. Nonetheless, the company continues to win new contracts and push new technology, expanding its dominance and setting the stage for explosive growth as the global economy cycles into better times.

Price increases across BASF’s product lines, successful cost cutting and management’s projection of faster growth in 2010 provide a reason for optimism. Buy BASF up to EUR45 (USD65) if you haven’t yet in the local market.

China High Speed Transmission Equipment (Hong Kong: 658) continues to ride one of the surest investment trends of the year: China’s seemingly insatiable demand for wind generated electricity. The refusal of China and India to set binding global regulations on carbon dioxide emissions at the Copenhagen meetings in December disappointed many Western observers. In reality, however, China has become the world’s largest market for wind power, and the country’s goals ensure that the industry will continue to prosper.

China High Speed Transmission Equipment expects wind-related projects to account for over 78 percent of its sales in 2010, which should drive profit growth of well over 20 percent. Buy China High Speed Transmission Equipment up to HKD20 (USD3).

China Resource Power (Hong Kong: 836) is a play on China’s demand for electricity, which continues to rise in tandem with the country’s explosive economic growth. As the country’s fourth-biggest power producer, China Resource Power continues to enjoy solid growth. Output for January and February rose 49.2 percent, as the company added capacity at a feverish clip. Lower fuel costs and higher tariffs also helped. Buy China Resource Power up to HKD20 (USD3).

Shares of Électricité de France (France: EDF, OTC: ECIFF) have been under pressure since the failure the Copenhagen climate summit failed to yield binding restrictions on carbon dioxide emissions. Analysts and investors have viewed the firm’s recent nuclear-power acquisitions with skepticism; credit raters downgraded the company because of the debt it assumed to complete the purchases. That’s put the focus on the company’s efforts to reduce debt through asset sales, as opposed to the potential of the newly added operations. Investors’ focus should change when profits heat up, particularly in the UK and Belgium. A nuclear venture in the US with Constellation Energy (NYSE: CEG) is already profitable and stands to gain from the Obama administration’s push to boost use of nuclear power. Buy Électricité de France up to EUR60 (USD80) in the local market.

HYFLUX Water Trust (OTC: HXWTF) continues to expand its portfolio of cash- generating major water projects, lifting its fourth quarter revenue from operations and maintenance by more than 70 percent from the prior year. Revenue from projects under construction fell substantially as they were completed. But given the shortage of clean and safe water supplies worldwide, there’s no shortage of new projects to spur further growth and gains. We’ve already more than doubled our money with position, but the stock has plenty of headroom. Buy HYFLUX Water Trust up to USD1.50.

Cutting Edge Tech

This Portfolio comprises of generally higher risk but higher potential plays.

AeroVironment’s (NSDQ: AVAV) sales were up 18 percent sequentially in the third quarter, and operating margins came in at a solid at 14 percent. Unfortunately, the company missed estimates and reduced its future sales forecast, and the stock dipped accordingly. We see no reason to bail: Demand for unmanned aerial vehicles is nowhere near its zenith. Buy AeroVironment up to USD32.

American Superconductor Corp (NSDQ: AMSC) has been one of our most volatile holdings over the past year and a half, and high expectations have been the stock’s biggest problem. The firm’s revenue doubled from a year ago in its fiscal third quarter thanks to China’s burgeoning wind-power industry. Meanwhile, its US operations benefited from the Dept of Defense’s push for efficient and self-sufficient energy resources that use superconductors. But this good news appears to have fallen short of investors’ expectations; share prices have slipped a bit. This weakness provides us with another opportunity to pick up the shares on the cheap. Buy American Superconductor Corp up to USD34.

Qualcomm (NSDQ: QCOM) made several bullish moves for investors this month, raising its dividend 12 percent, announcing a buyback of up to $3 billion shares and forecasting that profits would hit the high end of guidance for its fiscal second quarter. That good news hasn’t stopped this stock from revealing its usual cyclical tendencies. But it does show that the company’s fortunes remain intact and hardwired into the connectivity explosion. Buy Qualcomm up to USD45.

QinetiQ Group’s (London: QQ, OTC: QNTQY) innovative defense technologies continue to wow potential customers. The company’s earnings have suffered from delays in government contract approvals, forcing management to weigh some hefty cost cuts–including a halving of the head office headcount. These moves should keep the company on the right track until the government money comes through. Yielding over 3.5 percent, QinetiQ is a buy up to GBP1.75 or USD4.75 for the OTC shares.

Starpharma (OTC: SPHRY) has inked a new drug delivery deal with Eli Lilly & Co (NYSE: LLY) that reinforces the potential of its dendrimer technologies. The Australian firm’s stock has moved up quite nicely since added it to the portfolio, and there’s more to come. Starpharma is a buy up to USD6 for aggressive investors.

Red White and Blue

The Red, White and Blue Portfolio focuses on companies that were leaders in the 20^th century and are positioned for dominance in the 21^st. Our objective is to buy and hold, though we will take profits when gains near-term gains outstrip near-term prospects.

AES Corp (NYSE: AES) is first and foremost a bet that management will be able to execute on an ambitious plan of building its global power-production capacity. Management projects that the company’s earnings will rise at an average annual clip of at least 13 to 15 percent over the next five years. Although this goal appears achievable, the company could experience some bumps in the road due to financing, the level of economic growth, regulatory matters and construction-related setbacks. That’s the message behind management’s decision to reduce full-year earnings projects for 2010 and 2011 by $0.05 per share. Buy AES Corp up to 15 if you haven’t already.

Hewlett-Packard Company (NYSE: HPQ), the world’s largest computer maker, has the biggest market capitalization of our Portfolio holdings. Earnings surged 25 percent in the quarter ended Jan. 31 thanks to cost cuts and solid results in key product lines. This stock will tend to follow the fortunes of the technology sector more closely than other recommendations. But this 20^th century IT giant is positioned to thrive in the 21^st century; buy Hewlett-Packard Company up to 50.

Itron (NSDQ: ITRI) turned in fourth-quarter earnings of 13 cents a share, handily beating Wall Street’s expectations. Revenue increased 10.3 percent and full-year earnings surged to 82 cents, thrashing analysts’ expectations of just 60 cents per share. The key was a pick-up in the company’s North American business, which lifted the order backlog to an all-time high of $807 million. Backlog is the fuel for future revenue and points the way to powerful growth ahead. The key product remains advanced meter technology, which is essential for a smart power grid. The stock has headed higher gradually, following the company’s improving fortunes. We expect more of the same down the line. Buy Itron up to 70.

Insituform Technologies (NASDQ: INSU) has found a new niche for its pipe repair technologies, oilfield and pipeline services–a major factor behind its strong-fourth quarter results. The company’s quarterly revenues jumped 56 percent from a year ago, while operating income was 53 percent higher and earnings were up 21 percent. The company’s sewer line repair operations also fared well, winning $6.5 million in stimulus funds. Earnings per share were slightly lower because of new common stock issued as part of the company’s recent restructuring moves. But earnings still trounced estimates and–coupled with news of several major new contracts–sent the company’s share price up sharply. This news warrants a higher buy target; buy Insituform Technologies up to 25.

Kinder Morgan Energy Partners (NYSE: KMP) posted very strong fourth-quarter earnings as distributable cash flow rising 62 percent. Management successfully brought new projects on line and enjoyed a rebound in its carbon dioxide transport unit. Coupled with the acquisition of several ethanol-related assets, these positive developments put the master limited partnership on track to generate higher cash flow and pay higher distributions for the rest of 2010 and beyond. Buy Kinder Morgan Energy Partners up to 65 for growth and income.

Ormat Technologies (NYSE: ORA), the leading pure play geothermal power, increased fourth-quarter power generation 14 percent from a year ago. Revenues jumped 20.4 percent, while the company’s project backlog grew to $90 million. The company also announced another power sales contract with Nevada’s NV Energy (NYSE: NVE). Ormat’s shares have pulled back this year amid waning enthusiasm for renewable energy. But this company doesn’t rely on government subsidies to generate profits. We’re ahead on the stock, but there’s still plenty of room for price appreciation. Buy Ormat Technologies up to 30.

Metals and Materials

We own this group primarily as a bet on escalating global demand for raw materials, a product of the rapid urbanization underway in the developing world. Some of these recommendations have posted substantial gains, but investors should note that these highly cyclical plays are often volatile. That being said, the materials group stands to benefit from long-term demand trends.

BHP Billiton (NYSE: BHP) is a leading producer of a full range of metals and materials, from coal and iron ore to precious metals. The company’s recent attempts to grow via takeovers have been at least temporarily rebuffed, and year-over-year comparisons have suffered due to falling commodity prices. That should begin to reverse this year, however, as prices have stabilized. Meanwhile, the company is in prime shape to rev up production as conditions improve. This recommendation is up substantially but there’s plenty of room for further appreciation. Buy BHP Billiton up to 78.

China Metal Recycling (Hong Kong: 773) is a beneficiary of two major trends: China’s ever-growing need for more materials to meet the demands of burgeoning industry, and its need to use those same materials more efficiently. That’s a trend that will continue to power its profits for many years to come. Buy China Metal Recycling up to HKD10 (USD2).

Freeport McMoRan Copper & Gold (NYSE: FCX) recorded strong fourth-quarter earnings, primarily because of recovering copper prices. Results were tempered by lower copper production, though that was somewhat offset by a 19 percent increase in gold sales. Over the past several years, the firm has increased its production potential through a series of acquisitions, discoveries and upgrades to existing mines. Before the crash in 2008, the company was beginning to benefit from those aggressive moves. But lower prices weighed on profitability as of late. With the global economy returning to life–particularly in China, where robust copper demand has buoyed prices–Freeport McMoRan Copper & Gold stands to fulfill its potential. Buy Freeport McMoRan Copper & Gold up to 85.

MP Evans (London: MPE) is a play on agricultural commodities, which also took a major hit as the global economy headed south. Benefit from the rebound in agricultural commodities and buy MP Evans up to GBP5 (USD8).

Vale (NYSE: VALE) produces a wide range of metals and materials, but the Brazilian mining giant’s most important product is world’s richest iron ore–an essential component in steel. Lower costs and taxes lifted the company’s fourth quarter earnings. Going forward, expanding industrial production should be a key catalyst for the stock. Management recently noted that this growth should “continue over the coming quarters, reflecting the scenario of strong demand and inventory dynamics, thereby continuing to pressure demand for minerals and metals.” In particular, China’s demand for vital resources bodes well for the company’s future. Besides solid fundamentals, the stock still trades at 50 percent of its 2008 high; there’s plenty of room for capital appreciation. Buy Value up to 32.