Dow Jones 12465.31 -6.01 1:11 pm PST, December 20, 2006 NASDAQ 2428.62 -0.93 For info, visit access.smallcapnetwork.com S & P 500 1423.86 -1.69 Change your subscription status here Russell 2000 785.48 +3.38 VOLUME 06: ISSUE 100 A Changing Tide For Challenger Powerboats? Company Name: Challenger Powerboats, Inc. Stock Symbol : CPWB Coverage Initiated: February 6, 2004 Current Price: $.039 Average Volume: 91,574 52 Week Range: $.029 - $.165 Suggested Target: $.20 Suggested Stop: $.02 Ladies and gentleman, today's edition all boils down to one idea - we think now may be the ideal time to be an owner of Challenger Powerboats, Inc. (OTCBB: CPWB) shares. Today's news is.....well, the term 'Wow' seems like an understatement to us. Yeah, we know - we started with the Grand Finale first. However, we suspect you'll agree with our conclusion once you read the 'why' behind our opinion about being a shareholder. The stock's downside is limited, while we view the upside as enormous relative to current trading levels. And now, it looks like the company is living up to their renewed potential, just as we described they could only a few months ago.  You may recall that the company went through an enormous change in the middle of this year.....to a renewed performance boat focus, with a new name to boot. Has it paid off? We just learned of a major victory stemming from Challenger's presence at a recent boat expo, so yes, we think the overhauled company may indeed be able to make good on their potential. So stock owners, future or present, keep reading.....we think shares may be ready to make a major upside move, with triple-digit gains not being out of the question.    Lucky 7 The 'news' is straight-forward - Challenger just sold, delivered, and got paid for seven high-performance boats. The full press release is below, and we really recommend you read it. As for its significance, here's our take......  Our digging found that the current price range for a Challenger boat is anywhere from $66,000 to $189,000, according to the inventory viewable on the company's Website. Just doing a little ballpark math here for the units we saw 'for sale', we calculated the average selling price to be about $140,000 per boat. So, our admittedly-rough calculation about how much revenue this sale actually might mean puts the figure somewhere around a million bucks, assuming the sales price on the seven units sold is comparable to the typical asking price we saw on the site. Maybe it's a little more than a million dollars, or maybe a little less. We don't know for sure (yet), but frankly, we also don't think the number is the point - we're pretty confident it was substantial enough to be considered a major improvement. Why? Just for some perspective, in 2004, net revenue totaled up to $164,712. In all of 2005, the company saw $1.7 million in net sales.  You read that right - in one transaction, Challenger just booked a sale probably about half as big as all of 2005's revenues.  See why we think CPWB may be undervalued? Or more to the point, do you now see why we feel the opportunity may be bigger than most people realize?  The way we see it, the current trading level around 4 cents isn't reflective of where the company is going: we feel it's reflective of where they've been. The thing is, this boat manufacturer underwent what we see as a major overhaul a few months ago...from top to bottom. The paradigm shift was too extensive to get into now, but trust us - it was huge. You may want to re-read the blog and newsletter archive to really understand the scope of the change. As far as we're concerned though, comparing the current Challenger to last year's Challenger is like comparing apples to oranges.  In our opinion, that's the edge today's investors may be able to capitalize on....the potential success Challenger may experience in 2007 while shares are possibly priced based on 2006's results.    Wash, Rinse, Repeat Aside from today's big news, the press release also said something else we find just as encouraging as the big sale. And what was that? The seven boats were sold to a new dealer....a major Mid-Atlantic dealer with multiple locations. If these Challenger boats get snatched up by buyers as quickly as we think they could, we'd say the odds are good this same dealer would be more than willing to place a 2nd - and perhaps even larger - order in the future.  If the news rings a bell, it may be because of the similar news we blogged just a few days ago. On the 12th, Nautique International - a major distributor with a network that reaches to Canada, Europe, Asia, and Australia - signed as a distributor after they were impressed by Challenger's boats at the Fort Lauderdale (FL) Boat Show. The buyer from today's news about the sale of seven units, although un-named, was also the result of a relationship forged at the Fort Lauderdale show.  Reading between the lines, we'd have to say Challenger is making the most of these shows, drawing interest from dealers and distributors as well individual buyers.  And here's the fun part.....these were just the results from attending one show - the one in Fort Lauderdale. Since then, they've attended a similar show in St. Petersburg, and will be at the Miami Boat Show in February. If past performance is any indication, we expect to see more good news after each show (and Challenger does indeed plan on being highly involved in the boat show circuit in 2007.)  The point is, we feel investors could be well rewarded if the company can continue to generate a buzz within the performance boating world. And just so you know, we think the buzz is more than merited. Challenger's DDC boats are driven by some of the racing circuit's top performers. It's the kind of performance-credibility advertising you couldn't pay for if you wanted to.    All Big Waves Start as Small Ones Truth be told, we would have liked CPWB's possible upside anyway - without the news. While there may have been no explicit reason for the recovery effort, we've also observed how stocks can 'talk'. That's just an easy way to describe how a chart's pattern can appropriately precede specific, publicized news or events. We kind of figured something was up several weeks ago, when shares stopped falling, flattened for a while, and then started quietly inching higher. Currently trading at 4 cents, the stock is already up 42.8% from its November low of 2.8 cents, and it seems to us there could be plenty more of the same in store. On a technical basis, the new uptrend alone would have been enough of a bullish signal for us.  In any case, if shares are able to make such a strong move on little to no news, what do you think they'll be able to do when this news starts to spread?  As a result of our outlook, we're issuing a suggested target and stop with today's issue. Let's establish an initial target of 20 cents, with a stop level at 2 cents. As we've said before, those are only suggested ideas based on our basic technical read. Perhaps they'll help you manage the opportunity if you choose to take action. Both numbers may be changed in the future, but we'll let you know here or in the blog if they do.  And for what it's worth, we feel this may just be the beginning of a string of positive announcements from Challenger. Remember, the company - for all intents and purposes - is a new company. That newness translates into a major opportunity to capture more market share, sign more dealers, sell more boats, and book better revenue than we've seen in prior years. Or figuratively speaking, we don't think there's too many directions to go but up for what we see as an undervalued stock. Ergo, we feel the investment community's opinion of CPWB is only likely to improve.....a lot. In our opinion, as the story continues to unfold, Challenger shares could offer up a great deal of appreciation for today's investors.    Challenger Signs New Dealer & Ships 7 Boat Order  Washington, MO - Dec 20 / Challenger Powerboats, Inc. (OTC Bulletin Board: CPWB) today announced that it has signed a new multi-location dealer located within the Mid-Atlantic region on the eastern seaboard. The dealer immediately placed a seven boat order which has been paid for and delivered.  Jeff Gayer, Challenger's Director of Sales commented, "To have a new dealer immediately step up with a seven boat order, we believe is a testament to the value proposition that Challenger offers. Due to their coastal location, our new dealer anticipates strong demand for Challenger's "go fast" DDC high performance line."  Challenger CEO Laurie Phillips stated, "Once again, relationships we've fostered from the Ft. Lauderdale International Boat Show have converted into valued customers. We've since also appeared in the St. Petersburg, Florida Boat Show and hope to soon announce our progress there as well. In addition to our recent announcement of our attendance at the Miami International Boat Show in February 2007, we plan to continue exhibiting at other major boat shows over the next several months, a critical component of our overall marketing strategy for 2007."  She added, "The last several transactions we've announced are a clear indication that we are now beginning to gain traction as we expand our footprint here in the U.S. as well as abroad in overseas markets. With the recent management changes and corporate restructuring behind us, this is an exciting time for the Challenger organization as we now look forward to focusing on the growth of our business."  About Challenger Powerboats, Inc.  Challenger Powerboats, Inc., designs and manufactures "go fast" offshore sport boats and family sport cruisers that target the recreational power boat market. The Company holds the exclusive rights to the Duo Delta-Conic "DDC" hull for boats up to 40 feet in length. The DDC hull is a patented revolutionary design by world-renowned marine designer Harry Schoell. Proven world-class technology is incorporated into the manufacturing of the boats at Challenger's 65,000 sq. ft. facility located on the Company's 12 acre complex in Washington, Missouri. For further information about Challenger you may visit www.challengerpowerboats.com or www.sec.gov to view the Company's public financial information and filings.  Forward - Looking Statements  This release contains forward-looking statements, including, without limitation,statements concerning our business and possible or assumed future results of operations. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including: our ability to continue as a going concern, adverse economic changes affecting markets we serve; competition in our markets and industry segments; our timing and the profitability of entering new markets; greater than expected costs, customer acceptance of our products or difficulties related to our integration of the businesses we may acquire; and other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law.  Contact:  Michael Novielli  Chairman  Ph (845) 575-6770 x202  mnovielli@xtremecos.com    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the SmallCapDigest Email Newsletter on a regular basis. 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