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.

Tags:

beefeater-grill listed on couponmatrix.ukchoice-store listed on couponmatrix.ukthe-london-bridge-experience listed on couponmatrix.ukparadise-wildlife-park listed on couponmatrix.ukskillshare listed on couponmatrix.ukwheel-gate-adventure-park listed on couponmatrix.uk
beefeater-grill listed on couponmatrix.ukFor a meal that will fill your belly and fit your budget, head to Beefeater. With a meat-rich menu you can sink your teeth into, and more than 140 relaxed restaurants dotted across the country, it’s the perfect place to go for your Sunday lunch without spending a fortune. Use your Beefeater vouchers to make feeding the whole family all the more affordable - and don’t forget, with your new-found savings you can splash out on those essential sweets after!
choice-store listed on couponmatrix.ukWith an incredible range of luxury fashion to help your wardrobe really stand out from the crowd, Choice Store is a retailer streets ahead of its competitors. Pick up a Choice Store discount code and get your hands on some game-changing fashion at prices that won’t break the bank. With some truly iconic brands on offer such as Stone Island and Ralph Lauren, if you’re into big names then they don’t get much bigger than at Choice Store.
the-london-bridge-experience listed on couponmatrix.ukExplore the darkest recesses of one of the capital’s most iconic structures alongside its even darker chapters in history. Be captivated, scared and bewitched for a morsel of the asking price with a London Bridge Experience discount code and have enough cash left to bring a friend along for the ride. With skilled and educated actors to guide you through the mystery and wonder of London’s sordid past, discover the underbelly of the countries century-long struggle today.
paradise-wildlife-park listed on couponmatrix.ukHertfordshire’s hidden gem has won multiple awards for its enclosures and conservation initiatives, and the big cats, primates and endless other species that are lucky enough to have this extraordinary facility as their home will be delighted to meet you. Your Paradise Wildlife Park vouchers won’t just enable you to meet the residents, though - there are many other attractions on offer, including a dinosaur park to keep the roar factor on eleven even when the lions are taking lunch.
skillshare listed on couponmatrix.ukPush the limits of your artistic boundaries with Skillshare, the online learning hub for creatives and web entrepreneurs alike. However you choose to improve, remember to build out the skillset you want whilst using a Skillset discount code to keep the cost of learning to a minimum. You’ll have no shortage of options to choose from either, with courses covering everything from creative skills like drawing, to lifestyle classes on cooking to lessons on leadership and social media marketing.
wheel-gate-adventure-park listed on couponmatrix.ukWelcome to Wheelgate Park, an action packed theme park set in Nottingham for the whole family! Set in 30 acres of land including 20,000 feet of indoor adventures, the park has an enticing array of all-weather features from making a splash with water rides to a daring alien zone and even unicorn rides. With Wheelgate Park discount codes you can enjoy a fantastic day out for less. Whatever the weather, Wheelgate Park will give you an unforgettable experience.