The development, and stability and error analyses of nodal expansion method (NEM) for one dimensional steady-state convection diffusion equation is presented. Following the traditional procedure to develop NEM, the discrete formulation of the convection-diffusion equation, which is similar to the standard finite difference scheme, is derived. The method of discrete perturbation analysis is applied to this discrete form to study the stability of the NEM. The scheme based on the NEM is found to be stable for local Peclet number less than 4.644. A maximum principle is proved for the NEM scheme, followed by an error analysis carried out by applying the Maximum principle together with a carefully constructed comparison function. The scheme for the convection diffusion equation is of second-order. Numerical experiments are carried and the results agree with the conclusions of the stability and error analyses.