For the majority of last week’s shortened trading, owners of bulletin board stock China Energy Recovery (CGYV) had plenty of reason to be excited - shares rallied from a close of $1.50 before Christmas to a peak of $2.09 by January 2nd. That’s a pretty big move (+39%), particularly when the holidays are inspiring vacation time. By the end of last Friday though, the air had been let out of the bubble… CGYV was back to $1.70, giving up most of the gain.

Nevertheless, the last several days have actually been pivotal - in a bullish way - for China Energy Recovery shareholders.

Despite the late selloff on Friday, the buying volume up until then had been growing quite a bit (by bulletin board stock standards anyway). And, CGYV did manage to hit its second-highest high in months with that peak of $2.09. While it would have been preferable to see CGYV just blast-off and hit $6.00, we have to give the stock a little wiggle room.

As we can see already today, the buyers are coming back to the table for more after Friday’s close at $1.70. China Energy shares are currently priced at $1.75, but traded as high as $1.80 in the earliest part of today’s trading session.

Bottom Line: Slowly but methodically, CGYV appears to be picking up steam. It may not be a bad time to add your first position, or add more to your current position. If this small cap pick blows through the previous high of $2.25 (made on November 17th), we may not see another retest like the one we saw on Friday.

Also, don’t forget we’re looking for revenues somewhere between $22 million and $24 million for their fiscal 2008. Plan on earnings around $1 million. For 2009, sales should be in the $40 million area, and earnings could fall in between $3 million and $4 million. By comparison, the current market cap of roughly $40 million underestimates 2009’s likely results.

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