If you managed to spot the opportunity in June 2021, when the share price was sitting at just 107.3p, you’d be sitting on a tidy little profit right now.

But beyond the extraordinary growth since, what’s actually driving the stock higher? And could there be more to come for investors sitting on the sideline today? 

How does the maths break down?

Five years ago, the shares were trading at 107.3p, during one of the most turbulent periods in the company’s long history. As I write on Wednesday morning, the stock is trading at 1,253.8p and up nearly 5% year to date.

Here’s a quick breakdown of how the maths works out for an investor who bought shares five years ago and still holds those same shares today:

• Starting investment: £4,160

• Starting share price (4 June 2021): 107.3p
• Shares purchased: 3,877
• Current share price (3 June 2026): 1,253.8p
• Current investment value: £48,610
• Total estimated gain: 1,068% or £44,450

If you had put that same £4,160 in a cash savings account at a 4% annual rate, it would be worth just over £5,000 today.

That difference shows the potential of buying high-quality stocks at the right price, and backing them in for the long term. The big question is what really drove such a dramatic turnaround? 

From near-collapse to FTSE 100 giant

The company develops and delivers power and propulsion systems across civil aerospace, defence, and power systems. With a market cap of approximately £107bn, today it’s a true giant of the Footsie.

The transformation has been extraordinary under CEO Tufan Erginbilgiç has been impressive. He launched an aggressive cost reduction programme, boosted margins, and re-focused the company’s strategy. Those initiatives, combined with strong civil flight hours and surging defence and energy spending, have helped boost the stock in recent years.

Is the best already behind it?

I don’t currently hold shares in the company, but I’m actively considering whether now might be the right moment to add them to my portfolio. I personally think that in an increasingly uncertain investment and geopolitcal environment, Rolls-Royce could be just what my portfolio needs.

With a price-to-earnings (P/E) ratio just shy of 19, it doesn’t feel overvalued to me right now. The 0.7% dividend yield is modest, so I think investors really need to believe in the the growth story from here.

That all sounds great, but what about the risks involved?

Risks to consider

There are some real risks to the stock that are worth highlighting for long-term investors. Civil aerospace revenues are still tied to engine flying hours and the ongoing Middle East conflict could be a real swing factor here.

The business has confirmed full-year guidance remains unchanged despite the conflict, but there is still some element of uncertainty there. Supply chain risks are always front of mind in the defence sector, and I think the company’s push into new power markets carries some execution risk as a more recent addition.

The company’s half-year results release is on 30 July, which I’ll be watching closely. Management’s view of the world and latest growth expectations could be the key factor that determines whether I see this is stock as a good buy in 2026.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

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Lately, though, the momentum has wobbled.

The share price is up 6% so far this year, slightly outpacing the 4% gain seen in the wider FTSE 100 index. But the share has been volatile, moving up and down as investors try to price the impact of everything from the Middle Eastern conflict’s impact on jet fuel prices to the outlook for defence spending.

Sometimes, when a share has a blazing run and then starts to stutter, it can mean it is peaking, before then heading downwards.

But that is not always the case. Sometimes, like a mountaineer scaling a peak, it is simply having a bit of a breather before starting the next leg up.

So, could there be more magic still to come from Rolls-Royce shares in future – and ought I to buy now?

The business might just be getting going

The dramatic turnaround in the share price over the past few years has not come from nowhere.

Some of it can be explained by a shifting demand environment. After lean years for civil aviation during the pandemic, passenger demand roared back. That was good for companies making or servicing aircraft engines, including Rolls-Royce.

A changing geopolitical environment, especially following Russia’s full-scale invasion of Ukraine, has also led to higher demand in the defence sector – another big part of Rolls’ business.

While the background demand picture has undoubtedly helped Rolls-Royce turn around its performance, that is not the whole story.

The company has made strategic choices about where to focus its efforts, it has cut costs and also set ambitious financial targets. That has helped it to make more of the opportunities that a strong demand environment presents.

But while that has been positive so far, it could be even more powerful over the long term. Laying the foundations can take time and involve some disruption, but building on them should help Rolls more fully realise its potential.

Rolls-Royce is aiming to perform even better in coming years. Its recent performance has helped build credibility when it comes to delivering on its targets.

If the business does well enough, that could potentially propel Rolls-Royce shares even higher from here.

So, should I buy and hold?

But there are some risks that could get in the way of that.

The Middle Eastern conflict threatens passenger demand, as we are seeing in statements from multiple airlines. That could lead carriers to cut back on spending plans for new planes and could also reduce the servicing frequency for existing ones.

Trading at 43 times earnings, I do not think Rolls-Royce shares offer me sufficient margin of safety to account for risks like that.

So while I will be keeping an eye on how the business performs from here, at the moment I am not tempted to invest.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Christopher Ruane does not hold any position in the companies mentioned.

The post Is the best still to come for Rolls-Royce shares? appeared first on The Twelfth Magpie.

However, can its shares still rise by a further 26% to £15.97 by the end of August?

This is exactly three months from now. And, I don’t think it’s out of the question that the firm’s shares can reach this figure over that period.

The bull case

There are many catalysts that could propel Rolls-Royce shares further. Across all the aircraft engine manufacturers’ divisions, there are plenty of reasons for optimism.

Firstly, its largest and most profitable division continues to excel, as large engine flying hours have now reached 115% of 2019 levels. They’re expected to remain around 115%-120% for the rest of the year.

As a result, in the first quarter of 2026, the company’s large engine original equipment (OE) deliveries grew by 18% year on year.

Secondly, and I’d say rather unfortunately, global conflicts look to be on the rise. The company’s defence division should therefore benefit. We’re already seeing evidence of this in the first quarter, as defence OE deliveries increased by 20%.

Thirdly, the firm’s power systems segment saw a record number of orders in March. The company’s order backlog here now stands at £7.3bn.

I only see this accelerating, as trillions of dollars are expected to be spent on AI data centres over the next few years, and Rolls-Royce can help to power this.

Now, it’s important to note that the company is releasing its half-year results at the end of July. For its share price to reach close to £15.97, I think it would need to see a continuation of its strong growth or even better, in its interim report.

The bear case

While there are many positive aspects to the company’s operations, there are also a few obstacles for its shares to reach the target mentioned above.

Most notable is that its shares are already pretty expensive. Right now, they’re trading at a forward price-to-earnings ratio of 35.2. If they went up a further 26%, they would become even more expensive.

Also, investors should keep in mind that the next three months represent the summer holidays. And, currently, there are concerns about jet fuel supply, with many flights already being cancelled.

This could hurt demand for the company’s aircraft engines over the period. If there is evidence of this in the interim results and outlook, I think it will be very challenging for the Rolls-Royce share price to continue appreciating over the summer.

All hinges on the interim report

Ultimately, I believe whether the aircraft engine manufacturers’ shares reach £15.97 or not depends on how its interim results at the end of July go.

But even then, I don’t think it should matter too much for long-term focused investors, as long as they have strong conviction in the fundamentals of the company.

I think the firm has a very bright future, and the conditions are in place for all of its divisions to grow well over the long run.

Overall, that’s why I believe investors should consider buying its shares.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Muhammad Cheema does not hold any positions in the companies mentioned.

The post Can the Rolls-Royce share price reach £15.97 by the end of August? appeared first on The Twelfth Magpie.

Although some of the gloss has been taken off its share price performance in recent months – the aerospace and defence group’s shares are currently (1 June) changing hands for around 7% less than they were in March – many of these investors are probably sitting on some very healthy paper gains.

Why? Well, its shares have risen 13-fold since the end of 2022.

But it’s not necessarily a good idea to follow the crowd. After all, it’s impossible to know how much research these investors have undertaken. With this in mind, are Rolls-Royce shares still worth considering? Let’s delve deeper.

Fingers in many pies

With a widebody aircraft engine division, as well as exposure to the defence and power systems sectors, one of the things I like about the group is its diversified business model.

And it doesn’t appear to have been too badly affected by the conflict in the Middle East. In its first quarter trading update, the group described a “strong start to the year across all three divisions”.

Also, it maintained its 2026 guidance and said the outlook for growth across the group was “highly attractive”.

Large engine flying hours were 115% of 2019 levels, and increasing. In defence, it reported a 20% year-on-year rise in equipment deliveries. And additional demand from data centres and the public sector led to a strong order intake for gas and diesel engines.

Trouble ahead?

Of course, if the current ceasefire in the Gulf doesn’t hold, things could change. The pandemic demonstrated how vulnerable the group is to a downturn in the aviation industry.

And even after the recent pullback in its share price, the group’s stock isn’t particularly cheap. Any sign of a slowdown and there could be a large drop in the company’s market-cap.

However, for the time being, everything looks rosy in the Rolls-Royce garden. And there are a couple of other opportunities that could help it grow further.

More to come?

Firstly, it’s planning to return to the narrowbody aircraft market, probably working alongside an industry partner. Secondly, the group’s developing factory-built mini nuclear power stations, known as small modular reactors (SMRs).

Large-scale nuclear projects are technically challenging and, in this country at least, always seem to run over budget and fall behind schedule. Factory-built plants that are assembled on-site should be cheaper, quicker to fit together, and of uniform quality.

However, there are challenges. According to the Nuclear Energy Agency, there are 127 different SMR designs comprising five cooling methods and over a dozen fuel types. Will the Rolls-Royce version prove to be a winner? Nobody knows for sure.

But if all works as it should, the rewards could be enormous. The global SMR market is forecast to be worth $300bn by 2046. And the group’s boss reckons demand from AI data centres could result in Rolls-Royce becoming the UK’s largest listed company.

Undoubtedly, Rolls-Royce is a British success story and I can see why so many people on the Trading 212 platform (and others) have the stock in their portfolios. In my opinion, it’s a UK share that’s well worth considering.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

James Beard owns shares in Rolls-Royce Holdings plc.

The post Could 282,693 investors be wrong about Rolls-Royce shares? appeared first on The Twelfth Magpie.

With a swelling order book and multi‑year contracts already locked in, the growth momentum behind the business looks far from finished.

So where does the firm go from here?

What’s the latest update?

Rolls‑Royce reaffirmed guidance for 2026 of £4.0bn-£4.2bn in underlying operating profit and £3.6bn-£3.8bn in free cash flow in its 30 April-released Q1 trading update. And the details show exactly why management is so confident.

Civil Aerospace is seeing powerful momentum, with large‑engine flying hours already at 115% of 2019 levels. Growth in large-engine equipment deliveries jumped 18% year on year, and growth in large-engine shop visits rose 12%. Major new orders came in, including 40 Trent XWB‑97 engines for Atlas Worldwide and over 60 engines for Delta.

Defence is benefiting from a surge in demand, highlighted by orders for Türkiye’s 20 Eurofighters and gas turbines for Australia’s new frigates. And March saw the beginning of collaboration with Boeing on the next stages of the US Air Force’s B-52s. These will be refitted with Rolls-Royce’s F-130 engine.

Power Systems is also booming, with order intake across gas and diesel engines around 50% higher year on year.  As a result, the division’s order backlog stood at £7.3bn. In April, Rolls-Royce small modular reactors (SMR) finalised and signed the contract with GBE-N to supply the UK with three SMRs. Commercial terms were also signed with the ČEZ Group for the first of up to six SMRs in the Czech Republic.

How good were the full-year results?

All the major growth drivers were evident in the full-year 2025 results released on 26 February. One risk to these is any slowdown in global travel demand that would affect aftermarket aerospace revenues and cash generation. Another would be delays or cost overruns in any of its new systems that could impact earnings and cash flow.

However, 2025’s operating profit soared 41% year on year to £3.5bn, reflecting stronger large‑engine aftermarket performance and improved commercial terms. Meanwhile, revenue jumped 14% to £20.1bn, driven by higher shop‑visit volumes in Civil Aerospace, robust Defence demand, and powerful growth in Power Systems.

Free cash flow surged 35% to £3.3bn, supported by continued long-term service agreement balance growth and disciplined working‑capital management. The operating margin expanded from 13.8% to 17.3%, underlining the impact of cost‑efficiency initiatives and commercial optimisation.

Together, these results highlight a business delivering structurally higher profitability and cash generation. And further gains are expected as these underlying drivers continue to compound.

My investment view

Despite its recent price rise, Rolls‑Royce still looks very undervalued at a price‑to‑earnings ratio of 17.7 against its peers’ average of 28.5. These firms comprise Northrop Grumman at 17.2, BAE Systems at 27.4, RTX at 32.9, and TransDigm at 36.4. That discount feels increasingly difficult to justify given the company’s accelerating margins, swelling order book, and long‑cycle revenue visibility.

Strong core business drivers continue to power earnings, and new growth avenues, such as SMRs, are opening up. These make the business look structurally stronger than at any point in the past decade.

Given these factors, I will be buying more shares very soon. I also think them worthy of other investors’ consideration.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Simon Watkins owns shares in Rolls-Royce and BAE Systems.

The post Rolls-Royce shares are up 1,334% in three years — so why am I buying more as soon as possible? appeared first on The Twelfth Magpie.

Rolls posts a strong set of results, investors push the price up further, analysts lift their targets even higher. And repeat.

After five years, we see Rolls-Royce shares up a staggering 1,110%. And analysts have now lifted their average target price to 1,413p. That’s close to another 10% gain.

Has nothing changed?

I do, however, think there’s been a significant change in investor sentiment in 2026. Previously, I believe we’d been seeing a lot of investors buying simply due to share price momentum. It keeps going up, and they can’t afford to miss out — that kind of thing.

But now I think there’s been a shift towards investing based more on valuation. The massive five-year surge looks like it might finally have topped out — Rolls-Royce shares have been up and down in 2026, but have gone hardly anywhere overall.

The valuation the market might be settling on means a price-to-earnings (P/E) ratio of 35. That’s the forecast for the full year — and it could come down to 25 by 2028.

What comes next?

With our diversified portfolio of three high performing businesses, a net cash balance sheet, and a best-in-class total cash cost to gross margin ratio, we are creating a more resilient and agile Rolls-Royce that is better equipped to respond to changes in the external environment.

— CEO Tufan Erginbilgiç in AGM update, 30 April

The CEO went on to say “Good progress on our transformation, and the actions we are taking, gives us further confidence in our guidance of £4.0bn-£4.2bn of underlying operating profit and £3.6bn-£3.8bn of free cash flow for 2026“, adding, “We remain strongly positioned to deliver our mid-term targets, with substantial growth beyond the mid-term from both our existing and new businesses“.

That kind of talk makes it sound like those optimistic analysts might be bang on the money.

How do we get there?

But reference to “existing and new businesses” catches in my mind.

Rolls-Royce still gets the biggest portion of its revenue from the aero engine business — both civil and military. The defence business, though, provides only about 25% of total revenues. There’s a defence boost from the world’s current conflicts, for sure. But I think we should avoid putting too much store by that.

As for new businesses, that has to be predominantly energy, and the new small modular reactors (SMRs). They’re going in at the new power station on Anglesey, which is a big plus.

But there’s a fair bit of hype behind them too. Many see them as ideal for powering AI demand — perfect for hyper-scale data centres, perhaps.

What’s in between

My big unknown is how Rolls-Royce’s valuation might look in the transition. If the resurgence in aviation revenue flattens out before much in the way of SMR revenue comes in… what then?

With that uncertainty, I don’t see enough safety margin in the valuation of Rolls-Royce shares today for me to invest. There is still potential here, I’m convinced. But growth investors might do well to consider widening their horizons a bit.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Alan Oscroft does not hold any positions in the companies mentioned.

The post How can brokers still be tipping Rolls-Royce shares for even more growth? appeared first on The Twelfth Magpie.

That means a £1,000 holding would have lost £59 and would now be worth only £941.

That isn’t a disaster in the context of a long-term holding, but it’s enough to make investors ask a fair question: why has the FTSE 100‘s biggest growth story stalled?

Where’s it headed?

I think the answer depends on what you expect from the business. Rolls-Royce is still in a correction, and the broader mood around civil aviation has become less comfortable because of the war involving the US and Iran, which is pressuring airline operations and fuel costs. 

If that conflict drags on, some airlines could face jet fuel shortages. So the market isn’t just judging Rolls-Royce on earnings, it’s also weighing up geopolitical risk. And that can keep a share price stuck.

What matters next is whether the company can still grow through that noise. To its credit, it still has some encouraging numbers. Management expects revenue to reach £22.7bn this year and £27.54bn in 2028.

Its business diversity also helps, since it isn’t relying on civil aviation alone. That matters because it makes the group less exposed than some pure aerospace names.

On paper, the result is a stock that appears less stretched than many growth stocks, with a price-to-earnings (P/E) ratio of 18. But valuation’s never just about today’s earnings, is it? That’s where the debate gets interesting. 

Other options to consider

In my opinion, AstraZeneca looks better right now. It has free cash flow of £8.62bn and stronger debt-to-equity coverage, which gives it more financial breathing space.

A discounted cash flow (DCF) model also suggests it’s trading at 41.8% below fair value — a big discount for a blue-chip name.

The catch is that profits could come under pressure from an upcoming patent cliff for its darling drug Farxiga this year. So the growth signals are clear, but so is the risk, and that is the real trade-off.

British American Tobacco‘s another one I’m looking at. It screens well not just for growth, but income too, with a dividend yield of 5%.

That sort of payout can be attractive when markets are jumpy. But tobacco shares come with an obvious long-term question mark, as regulation, litigation and changing habits all matter.

So it may look appealing on yield alone, but the future isn’t straightforward.

Final thoughts

For me, the lesson’s simple. When hunting for growth stocks, it isn’t enough to chase earnings growth alone. You need to look at valuation, cash flow and balance sheet strength too.

Rolls-Royce still has a long-term investment case that’s worth considering, but investors should expect some short-term pain.

As I’ve outlined here, there may be better options on the FTSE 100 right now, and that’s worth thinking about before making any decisions.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Mark Hartley owns shares in AstraZeneca and British American Tobacco

The post How much would £1,000 invested in Rolls-Royce shares 3 months ago be worth now? appeared first on The Twelfth Magpie.

There almost seems to be a yo-yo effect. Just 12 days ago (Friday 15 May), the share price was £11.40. Now it’s £12.77.

If an investor had put £10,000 into the company’s shares back then, they would have £11,019 today. That’s not a bad profit for a less-than-two-week-old investment.

Now, can the company’s shares finally break free of the up-and-down movement they’ve been experiencing so far this year?

What are the obstacles?

There are a few risks and obstacles that may get in the way of Rolls-Royce shares moving higher. I’ll discuss two of the key ones here.

Firstly, and probably the most potentially disruptive to the business in the short term, is the war in Iran. The effect this is having on jet fuel supply could be detrimental to the firm’s largest division, civil aerospace.

Some airlines are already cancelling flights for the summer holidays, which means there could be a slowdown in demand for Rolls-Royce aircraft engines and service contracts. Even though the firm is still expecting engine flying hours to grow to 115%–120% of 2019’s for the rest of 2026, this risk can’t be ignored.

Secondly, the firm’s shares are currently quite expensive. They’re currently trading at a forward price-to-earnings ratio of 32.9. This isn’t a cheap valuation. Any negative news could therefore see the company’s share price falling.

Having said all that, I still believe the positives surrounding the company outweigh the obstacles it faces.

Catalysts for success

While there are certainly risks surrounding Rolls-Royce, ultimately, I believe it has plenty more catalysts for success.

My favourite ones revolve around the firm’s power systems division and its investments in small modular reactors (SMRs).

Over the next few years, there’s an anticipation of massive spending on AI infrastructure. This is expected to be in the trillions of dollars. AI data centres, in particular, will need to be powered somehow.

Rolls-Royce could benefit massively from this by being one of the key players powering the AI revolution.

In the company’s latest trading update, it reported that it already has a £7.3bn backlog in orders in this division. This highlights the strong demand for its power systems.

Moreover, the company has been involved in revolutionising energy sources. Its SMRs are cleaner for the environment, quicker and cheaper to produce, and more efficient than traditional nuclear energy. It’s already working on some for the UK and the Czech Republic.

In the short term, anything could happen to the company’s share price. It could fall back down to £11, or bounce back up to £13 and beyond.

But overall, given the potential the firm has, I think Rolls-Royce shares could thrive in the long term. Therefore, I think investors could consider buying some of its shares.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Muhammad Cheema does not hold any positions in the companies mentioned.

The post Rolls-Royce shares turned £10,000 into £11,205 in 12 days! Can they go even further? appeared first on The Twelfth Magpie.

Over the past year, a 46% gain. Not spectacular, but still well over double the 18% gain in the wider FTSE 100 index (of which the aeronautical engineer is a constituent member) during the same period.

Five years? Rolls-Royce shares are up 1,045% during that period.

That is a remarkable performance in itself. It also means that while the current dividend yield of 0.8% may seem insipid, a buyer back then (when there was no dividend) would now be getting a yield in the high single digits.

Has the opportunity now passed forever? Or might the share’s mixed performance so far this year potentially offer me an opportunity to buy a dip?

Share prices: business performance, momentum, or both?

To answer that question, it may help to step back and consider why Rolls-Royce shares have put in such a strong performance over the past few years.

In the short- to medium-term, a share price can rise because of what is known as momentum. Investors buy, pushing up the share price, leading other investors to buy, further pushing the share price up and so on.

A different reason a share price might rise is because of strong underlying business performance That can push it up in the short or medium-term, but also in the long term.

As Warren Buffett’s mentor Ben Graham said, in the short term the market is a voting machine, but in the long term it is a weighing machine. In other words, business performance ultimately trumps momentum.

I reckon the past few years have definitely seen momentum help Rolls-Royce shares.

But – crucially – that momentum has not come from nowhere. It has been based at least in part on business numbers. Rolls-Royce’s commercial performance has been transformed in recent years.

That has been helped by external factors like the post-pandemic demand recovery in civil aviation.

But it also reflects internal shifts, such as a more focused set of financial growth targets and an aggressive cost-cutting programme.

Rolls-Royce has the wind in its sails – but for how long?

Civil aviation demand recovery is not the only external factor that has worked in Rolls’ favour.

Its two other main businesses are defence and power systems. Both have benefitted from increased geopolitical risks and conflict.

I expect that to last for the foreseeable future, as far as defence is concerned.

Power systems seems less clear to me. If oil prices remain elevated that could increase interest in Rolls’ small nuclear reactors, already gathering significant attention.

But there is a risk that what happens is closer to the 1970s oil crisis: high prices drive customers to look at alternative energy sources, but when oil tumbles in price again, that interest largely evaporates.

For now, though, the bigger risk I see is civil aviation. High jet fuel prices and geopolitical uncertainty could hurt passenger demand, pushing airlines to cut back on engine purchases.

Priced at over 40 times earnings, I do not think that risk is adequately reflected by Rolls-Royce shares today.

Given the strength of the business, there could yet be another big opportunity here for small investors like me, at the right price. But I do not see it today and have no plans to buy.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Christopher Ruane has no position in any of the shares mentioned.

The post Has the big opportunity in Rolls-Royce shares gone forever? appeared first on The Twelfth Magpie.

But is this just the beginning?

More growth to come?

Looking at the latest institutional forecasts, Rolls-Royce’s rocketing rise may still have yet more room to climb. Jefferies has just recently issued a 1,530p share price target, while JP Morgan is close behind with a 1,500p price point of its own.

Compared to where the engineering giant’s trading today, these projections suggest a potential return of anywhere between 28.9% and 34% in the next 12 months. And in terms of money, that’s enough to turn £1,000 in up to £1,314 by this time next year.

So what’s driving this optimistic outlook?

In the last few years, Rolls-Royce has rebuilt its business around stronger margins, tighter cost control, and much more reliable cash generation.

Its civil aerospace franchise is benefiting from a growing services business, which tends to be more stable and profitable than selling engines alone. And with the additional tailwinds of rising defence spending, as well as promising small modular reactor nuclear technology, the company appears to be well positioned for sustained profitable growth.

Having said that, not all analysts are on the same page.

Not everyone agrees

As a bit of an outlier, the team at Berenberg has now issued a Hold recommendation with a more cautious share price target of 1,270p.

That’s still a little higher than where Rolls-Royce shares trade today. But it nonetheless suggests that the growth trajectory expected by other analysts may be a bit overblown. And this caution isn’t entirely unjustified.

Rolls-Royce is still exposed to the cyclical nature of the aviation sector, where flight hours are constantly in flux and demand for new engines is lumpy.

Even with a more cash-generative business model, the company isn’t immune to such cyclical shifts or supply chain disruptions. And with the conflict in Iran still unresolved, such disruptions could lie right around the corner, potentially putting the brakes on Rolls-Royce’s current momentum.

So where does this all leave investors today?

The bottom line

In my opinion, Rolls-Royce looks superb as a business. The turnaround’s real, the cash generation’s improved dramatically, and all three segments (Civil Aerospace, Defence, Power Systems) have a long road of growth opportunities ahead.

However, as a stock, the case is less clear-cut. With a lot of this expected future growth already priced in, I believe there are better opportunities for investors to explore elsewhere within this sector. And I’ve already spotted a more promising aerospace share from within the FTSE 100.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

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