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:

cat-footwear listed on couponmatrix.ukcoinbase listed on couponmatrix.ukflambards listed on couponmatrix.ukmattress-next-day listed on couponmatrix.uknicholson-s-pubs listed on couponmatrix.ukoffspring listed on couponmatrix.uk
cat-footwear listed on couponmatrix.ukFor rugged boots and shoes that'll last you a lifetime, CAT Footwear is the clear winner. Designed for both work and play, CAT's tough exterior guarantees protection from all elements, and while your feet are safe from outside damage, with CAT's smart design support, they'll also be comfortable on inside. Shop the huge range with a CAT Footwear discount code and pick up the latest pair for a fraction of the price. From boots and trainers to slip-ons and sandals, CAT Footwear has a fit for every foot.
coinbase listed on couponmatrix.ukBe you a Bitcoin billionaire or a cryptocurrency novice, Coinbase provides the means and resources to have full awareness of the digital currency market. Providing you with accessible tools to earn, trade and transfer hundreds of different cryptocurrencies online, all a customer needs is a Coinbase promo code to ensure they’re getting optimal conversion rates on their next trade. With daily price updates, frequent cryptocurrency news and a range of tutorials to get even the most oblivious newcomer acquainted with the basics, Coinbase is the crypto marketplace of choice.
flambards listed on couponmatrix.ukThose with a taste for adventure can make merry at Flambards, Cornwall’s largest theme park. There’s something for every visitor – from old-timey escapades for little tykes up to fully-fledged adult attractions – so ensure the whole family gets their fun for less with a Flambards discount code from Groupon. With special events, indoor-only days and a wealth of rides to enjoy, see how quickly your day flies at Flambards.
mattress-next-day listed on couponmatrix.ukTreat yourself to the good night’s sleep of your dreams and turn to MattressNextDay to give your boudoir a boost! As the UK’s leading online mattress retailer, you won’t find a better collection of high-quality, comfortable mattresses to choose from, and with a MattressNextDay voucher code from us, you can count on getting the best price for your bed. What’s more, if you’re looking for mattress next day delivery, you’ve come to the right place. Just spend over £150 at MattressNextDay, and you can enjoy this service for free!
nicholson-s-pubs listed on couponmatrix.ukPutting passion in pubs as far back as 1873, Nicholson’s know their way around a pouring tap and how best to complement it with some stellar pub grub. Stocking a varied palette of British craft beers alongside numerous wine vintages and spirits to sample, some Nicholson’s Pubs vouchers can go a long way towards cutting the cost of your accompanying meal or bagging two tipples for the price of one.
offspring listed on couponmatrix.ukOffspring is the UK’s leading ‘Sneaker Boutique’, bringing all the top branded shoes together in one place. They started as a small store in London, but now they provide the best and most exclusive sneakers to fans across the country. With your Offspring discount code, you can save on the very best names in the business, as well as high profile collaborations and the most recent releases. Don’t lose out on upcoming sneakers, beat the crowds and visit the top digital retailer for fashion sportswear.