According to management, after real estate prices collapsed in 2008, they formed the company and bought several blocks of land for attractive prices. NWHM develops and owns some properties (37% of revenues), and also builds real estate for 3rd parties (63%). However, first segment is more lucrative with 15% gross margins, compared to 4-5% fees they collect in second one.
Basically, it is a home builder located in California, building and acquiring mainly communities, either on it's own or through joint ventures. Let's look at financials.
US Housing market
Housing market is the cornerstone of every major economy. It's recovery has led US out of most major recessions, but this time it's really sluggish. New home sales are at levels seen during recessions in 1970s and 1980s, and house prices in certain cities still hover around 2012 lows, even though the average is steadily climbing up. Most home builders have lagged S&P500 performance in last 2 years (exception is Lennar, LEN), even though the housing market has quite improved. As a result, the whole group trades for low valuation multiples, with impressive growth rates. Situations like this offer great risk / reward ratios, and as such are very attractive investments. NWHM is the fastest growing public-listed home builder, with a great management (they made fun of each other on last conference call, too bad JP Morgan analyst didn't get the jokes), and a lot of potential. Bought the stock already with stop loss as usual. Good luck in investing!