NVR is a holding company that currently operates, through its subsidiaries, in 2 business segments: 1) the construction & marketing of homes 2) mortgage banking. For the FY ended 12/31/00, revenues rose 15% to $2.32B. Net income rose 45% to $158.2M. Revenues reflect an increased number of homes sold and higher average selling prices. Earnings also reflect favorable home market conditions and lower S/G/A expenses as a percentage of revenues.

March 27, 2001

NVR Incorporated (NVR) constructs and markets single-family homes, townhouses and condominiums under three trade names: Ryan Homes, NVHomes, and Fox Ridge Homes. The company currently serves 16 metropolitan markets in 10 states. In its largest market, the Maryland Metropolitan area, NVR derived 60% of its homebuilding revenues. The stock has appreciated very nicely over the past year, gaining a phenomenal 200%. Much of the stocks recent price strength can be attributed to NVR’s impressive performance in the third quarter. The homebuilder posted a 58% quarterly increase in earnings from the same period a year earlier. Even more interesting, the company only has 8.37 million shares outstanding with 60 million authorized. Sound like a possible split play? We certainly think so! The chart on NVR also looks compelling. NVR shares may have just signaled yet another momentum breakout. Bullish crossovers in both the MACD and Stochastic provide us with further confidence of a potential rally. To that end, we’ll look for resistance to come at today’s intraday high of $168.25 and then at the $170 mark. Support comes in at the $160 mark, bolstered by the 5-dma of $160.83. Traders looking for an initial position in NVR should look to time their entries when the stock breaches above resistance or recoils from support on strong volume of 40,000 shares traded by midday. We will set our stop at $156.50 to limit our downside risk.

Picked on March 27th @ $166.20
Change since picked 0.00
Stop Loss @ $156.50

March 29, 2001

Thanks to cuts interest rates and the Fed being biased for further reductions, we continue to look for NVR shares to remain in a strong position. We’re also anticipating an influx of buying to arise as a result of a possible stock split. With these two events in mind, it’s no surprise that the stock is gaining upward momentum. What’s more, NVR has only 8.37 million shares outstanding. Talk about a supply crunch! Turning to the chart, NVR shares rallied sharply higher on Thursday, adding $4.40, or 2.65%, by the closing bell. The stock did flirt with higher levels on an intraday basis, but found a stiff barrier at $173.14. Checking out the technical indicators, the MACD and stochastic both point to higher levels. On Balance Volume continues to make higher highs and indicates that there is solid buying of the stock during positive days. Traders looking for additional entry points should wait for a break through $173.14 or a bounce off the 5-dma of $165.55. We’ll recommend raising stops to $164, which will help to minimize downside risk.

Picked on March 27th @ $166.20
Change since picked +10.80
Stop Loss @ $164.00