If I'd invested ?10k in Rolls-Royce shares in an ISA six months ago …

Rolls-Royce (LSE: RR) shares have given investors a bumpy ride for years, crashing from 436p in January 2014 to just 98p at the start of 2023. That’s a staggering drop of 77.5%. The FTSE 100‘s aircraft engine maker’s troubles began in February 2014 when years of steady growth came to an abrupt end with a shock profit warning.

Four more warnings followed over the next 18 months.

One disaster after another

Rolls-Royce’s reputation was besmirched by revelations that executives had paid massive bribes to win export contracts, with the shady practice continuing right up to 2013. It was forced to hand over GBP671m to avoid prosecution by anti-corruption investigators in the UK, US and Brazil. Adding to its misery, its defence division was hit by government spending cuts, while its Trent 1000 engines, which go in Airbus 330 aircraft, suffered a string of technical problems.

Then Covid struck. The company generates most of its revenues from its aircraft engine maintenance contracts, which are based on miles flown. When airline fleets were grounded by pandemic restrictions, revenues plummeted.

I finally bought Rolls-Royce on 1 November last year, on the principle that things could only get better. And so they did, a lot faster than I expected. My holding is up 77.5%.

The stock closed yesterday at 145.42p. Somebody who bought Rolls-Royce exactly six months ago would be sitting on a 116% gain, turning GBP10,000 into a thumping GBP21,600. That’s purely from share price growth as there’s no dividend at the moment.

It would be all tax-free if they had invested inside their ISA allowance. Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only.

It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions. Rolls-Royce shares have weathered recent FTSE 100 turbulence pretty well, rising 8.45% over the last month.

So would I buy more today?

More turbulence ahead

In January, new CEO Tufan Erginbilgic shocked investors and staff by labelling his charge a “burning platform”, adding that “this is our last chance”. JP Morgan had previously warned he might take this approach, but assumed it would damage the share price. Instead, Erginbilgic’s rough words gave it a boost.

Now we wait to see if he can match them with action. Today, analysts are a lot more bullish about Rolls-Royce shares. Citi recently lifted its price target to 255p, saying it could see “a clear route to much better cash flow”.

This included more than GBP1bn from non-systemic elements dropping out. S&P said the company’s debt might win back its investment grade rating over the next 12-18 months.  Much still depends on Erginbilgic’s turnaround plan.

A global recession is a concern, as this would probably hit flying hours and revenues. Another worry is that net company debt is still high, at £7.21bn, although that’s down from £10.49bn at the end of 2021. I’m not banking my gains.

Typically, I buy shares with a minimum 10-year view. I’m holding on for the happy day when the dividend resumes. After the recent surge, I won’t push my luck by increasing my stake today.

It’s flown high in a short space of time.

No, I’m hunting through the FTSE 100 for other ISA bargains.

And there are plenty around.