If you like stock market volatility, the past two weeks have been very stimulating. For everyone else however, the action–which included a quickly reversed drop of 1,000 Dow points on fear-drenched May 6–was an all-too-painful reminder of what happens when investors lose their heads.

We saw that in abundance during the crash of late 2008, when massive down days were pretty much a daily occurrence. Week after week, selling begat more selling, ending up with many long-term investors deciding they just couldn’t take it any more, and throwing in the towel.

Ironically, that was the time when we at Portfolio 2020 were building up our holdings. Market history shows that selloffs always go on a lot longer than anyone thinks they can. And we were prepared to take the near-term hits that came from the stocks we added.

Stocks backed by good underlying businesses always bounce back from any calamity. It may take a while. But if a company can stay healthy and growing during a debacle in the overall market, it will richly reward anyone who buys it when others are panicking. That’s been our goal and the results are in the Portfolio tables presented on this website.

Portfolio 2020 stocks are chosen with the future in mind. They’re either large companies that are dominant now and doing the things they need to remain so for years to come, or smaller outfits with new technologies and processes that can revolutionize business, enriching us 10-fold and more in the process.

Both are inherently long-term objectives. We can and do take profits from time to time when a particular stock has a strong run. But by and large, we’re looking to buy high quality businesses at low prices and hold on until they reach their full potential, which at this juncture is still a long way off.

There are times when we will dump something. That’s mainly when the nnderlying business takes a dive. When that happens, our whole reason for holding the security is no more. No matter where the current price is, we’re out, On the other hand, when a stock is down with the general market, we usually take that as our opportunity to buy more.

At this point, it’s too early to know if there’s going to be any follow through on the recent selloff. It’s quite possible the bottom was in on May 6 and that things are headed up from here as economic news continues to improve.

On the other hand, a lot of people are very worried about a wide range of potential catalysts for a selloff, including the Gulf Oil spill, the European sovereign debt crisis, higher investment taxes, growing US regulation and the potential for a double-dip recession. And as we saw the week of May 5, once the selling starts, there’s no real rational way to predict the ultimate damage.

What we do know is many of our favorite Portfolio 2020 stocks are cheaper than they were only a few weeks ago. In fact, some are now well below buy targets, which are based squarely on their business prospects.

Buying now may not get you in at the ultimate low for a stock. But it will give you a price that’s bound to be left in the dust in coming years as the underlying business reaches its potential. And that’s the key to long-term wealth building.

Again, what we’re chiefly concerned about for each of our picks is the health of its underlying businesses. My task here is to review their operations, based on recently released first quarter earnings. Here’s what they show. Note that reporting dates for releases yet to come are shown at the bottom of this report.

AES Corporation (NYSE: AES) beat Wall Street estimates for its first quarter, a very big plus considering it was absorbing both weak power prices in the US and the impact of issuing some 125 million new shares to the sovereign wealth fund China Investment Corp (CIC).

CIC in return is investing some $1.58 billion in the company. The CIC stake has brought AES’ liquidity up to $2.8 billion. That’s a major plus for the completion of some 9,000 megawatts in new power production globally, much of it sought after renewable power.

In large part to the dilution, AES cut its full-year 2010 guidance to the 90 to 95 cents per share range from a prior forecast of $1 to $1.05. The payoff will be faster completion of the new plants and higher earnings down the road. The best news in the first quarter results was a near doubling of operating cash flow and free cash flow to $684 million and $141, respectively. That’s very good news for the company’s financial strength and ability to get the new projects going.

The company’s power plants in Brazil, Chile and the Philippines were again standouts, offsetting the weakness in North America. Philippine plant availability in particular took a leap forward, boosting output 74 over year earlier levels in the country. Still very much on track for robust long-run growth despite some short-sighted selling of its shares, AES is a strong buy up to 15.

Alstom (Paris: ALO, OTC: AOMFF) overall continues to suffer from sluggish business and government capital spending in Europe. The company also expects to see margins this year reduced by the purchase of Areva SA’s power transmission unit and looks for sales to remain weak for the remainder of the year.

Nonetheless, there were some very promising signs in the report, pointing to future blockbuster growth. Particularly promising are the transport (trains) and the power sectors, where the company is one of now only a handful of engineering giants capable of producing breakthroughs, which are likely over the next few years in everything from water treatment to cleaning the carbon dioxide from coal-fired electricity.

Backlog (work orders in progress) has been better but still remains healthy at E19.7 billion, up 5 percent over the past year. Operating income in the first quarter was 16 percent higher, margins of 9.1 percent topped management’s projections and the company is lifting its distribution by 11 percent.

Especially promising are operations in Asia (13 of profit), which are growing rapidly with the industrialization of that region and its need for a wide range of one-stop shopping for expertise. Buy Alstom either in the US or Europe up to EUR55 (USD75).

Electricite de France (Paris: EDF, OTC: ECIFF) derives the largest share of its profits from dominating the generation of nuclear power in France, with some 58 reactors under control. It will likely to give up some of this capacity as part of an overhaul of the French power industry.

That, however, will be offset eventually by the adoption of market prices for output. Meanwhile, EDF’s global production of electricity rose 4.3 percent, as acquisitions in Belgium and US, offset weakness elsewhere in Europe and a drop in reactor capacity to 78 percent from 80.2 percent a year ago and a target of 85 percent,.

The company also continues to make great strides reducing debt, the legacy of its many acquisitions. EDF has a 1650 MW nuclear plant now under construction in Normandy at a projected cost of EU4 billion. The reactor is using a new technology the company plans to roll out in the US, where it’s part of a 50-50 joint venture with utility Constellation Energy (NYSE: CEG), as well as in China.

The shares have been hit recently by the decline in the Euro versus the US dollar. That’s a setback likely to reverse even as earnings start to accelerate. Buy EDF up to USD60.

Ormat Technologies (NYSE: ORA) posted first quarter earnings that were broadly in line with management guidance. More encouraging, the results also showed progress in dealing with problems at a plant that had held back fourth quarter 2009 profits. That’s a very good sign for the rest of the year and management has now reaffirmed its prior profit targets with greater credibility.

Electricity margins were better than expected and rose 6 percent. Backlog was steady at $77 million and electricity revenue rose 6.5% percent as the company increased output to 918,000 MWH from 876,000 last year.

Ormat’s products segment–which constructs and maintains geothermal power plants–also had solid results. And the company continued to lay the groundwork for new projects, with the Hot Sulphur Springs acquisition and by forming plans to boost its Kenya project by 52 MW.

It now holds 300,000 total acres under lease to explore new geothermal sources. The payout ratio of just 20 percent leaves plenty of room for increases as well as internally funded growth. Buy Ormat up to 31.23.

Vale (NYSE: VALE) revenue rose 4.7 percent in the first quarter of 2010, pushing up EBITDA by a solid 33 percent and net earnings by 5.6 percent above last year’s tallies. The key was operating performance of the Brazilian company’s many mines, no mean feat considering the strike at Vale Inco, rising resource nationalism and labor strife around the globe.

Total costs were cut to $4.4 billion, down -12 percent sequentially from the fourth quarter of 2009. Looking ahead, these efficiency gains will be a major plus. But the real upside here is in revenue, as the company expands its low-cost reserves of iron ore and other key resources to meet what’s still exploding global demand. Iron ore, for example, is the essential feedstock for making steel. That’s made it a key beneficiary of China’s still very strong economic growth and development.

Some 70 percent of seaborne traffic for iron ore is now being driven by the Middle Kingdom, and there’s no end in sight for rising demand. In fact, the global output of carbon steel is now right back where it was at the last peak in June 2008, despite the continued weakness in the US and Europe.

The company’s nickel is also finding a growing market in Asia. That suggests many more solid earnings results for Vale, which posted first quarter earnings per share of 30 cents, up 15.3 percent from year earlier levels, and invested some $2.2 billion in new output. Buy Vale up to 30.

AeroVironment (NSDQ: AVAV)–June 23

American Superconductor (NSDQ: AMSC)–May 14

China High Speed Transmission Eq. (HK: 658)–Sept 20

China Resource Power (HK: 836)–August 24

Hewlett-Packard Company (NYSE: HPQ)–May 18

Hyflux Water Trust (OTC: HXWTF)–May 13

Qinetiq’s (London: QQ, OTC: QNTQY)–May 27

Starpharma (OTC: SPHRY)–August 24