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Wednesday July 11, 2012
NVR: Bucking the trend
by Stephen Leeb, editor The Complete Investor NVR (NVR) is a homebuilder that has bucked the trend, thriving in brutal times that have wrecked most of its industry. The stockis a true rarity. This leading homebuilder has sailed through—with positive profits, cash flow, and free cash flow — perhaps the worst depression any industry has experienced in modern times. Between 2007 and the present, NVR actually improved its balance sheet to the extent that cash on hand exceeds all liabilities. Moreover, during that same period the company purchased approximately 3 percent of its common stock. The first pillar on which NVR’s success rests is that the company speculates very little in land ownership or development. The second pillar has been the company’s insistence on doing business only in locales where it can establish a commanding market position. This helps reduce overhead costs by keeping the company’s personnel and operations concentrated in a relatively small number of places. Through 2011 the company focused on the eastern U.S.; in that year, nearly 50 percent of revenues came from the Washington D.C. and Baltimore metropolitan areas. The housing depression combined with the company’s compelling cash flow has permitted NVR to establish powerful beachheads in several new and potentially huge markets such as Chicago, Indianapolis, Tampa, and Columbus, Ohio. The gains from these new markets plus even a small recovery in housing—which is a major focus of government policy— should translate into leveraged growth for this one-of-a-kind company. Learn more about this financial newsletter at Stephen Leeb's The Complete Investor. Related articles: 
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