The Rolls-Royce share price is above 100p: what next?

first_imgThe Rolls-Royce share price is above 100p: what next? Image source: Rolls-Royce plc Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. 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Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Andy Ross | Tuesday, 16th March, 2021 | More on: RR center_img Simply click below to discover how you can take advantage of this. “This Stock Could Be Like Buying Amazon in 1997” Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! In the last six months, the Rolls-Royce (LSE: RR) share price has been as low as 40p per share and as high as 140p. Now back above the possibly important psychological marker of 100p, would I add the engineer’s shares to my portfolio?What’s happening with the Rolls-Royce share price?It’s worth noting that although the shares have increased a lot over the last month, over a longer timeframe they’ve performed poorly. In 2018, the shares reached 375p. In early 2014 they were over 400p.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Even comparing Rolls-Royce to another engineer like Weir Group or Melrose, shows that its share price has underperformed. Weir and Melrose have made gains over the last 12 months, while Rolls-Royce has lost ground.  That could either mean Rolls-Royce could bounce back stronger, or that there are just greater concerns about the company versus other broadly comparable businesses. I fear it may be the latter.Yet the last month has been a bit stronger. This momentum has, I think, more to do with the rotation to value stocks over growth stocks, rather than specifically a vote of confidence in Rolls-Royce itself.More than just a temporary blipCovid only amplified problems that Rolls-Royce had. It wasn’t firing on all cylinders before the pandemic, as I have pointed out before. There were issues with cash flow and its Trent 100 engines, to give just two examples. Neither of these can easily be ignored, they are pretty major problems. Even as Covid fades, and we have a roadmap in the UK out of lockdown, there’s still a lot of uncertainty around the engineer. Its wide-body planes will likely be less in demand for now, even as air travel increases. That’s because I’d suspect most people will likely take short breaks until they feel comfortable flying long-haul again. That means lower demand for bigger planes. The impact of the pandemic will likely hurt its cash flow for years too. This year it’s expected to spend £4.2bn. Turning this situation around will take a lot of management time and require a lot of action, including likely further cost-cutting. Those issues with the Trent 100 engines are still not fully resolved and have been eating up profits even before the pandemic. It’s hard to quantify what impact this has on the firm’s reputation, but it can’t do the brand any good. What could help boost the shares?On the flipside of this gloomy picture we have both short-term and long-term opportunities. In the short term, the share price could benefit from being seen as a Covid recovery share. Longer term, reliable defence income and moving into new emerging technologies, such as modular nuclear reactors, could boost growth and investor sentiment.In the end the simple answer to the question of whether I’d add Rolls-Royce shares to my portfolio is probably not. For me there are other Covid recovery stocks that are better value and that could make for more profitable long-term holdings. See all posts by Andy Rosslast_img read more