Rolls-Royce shares: a long-term price target and potential dramatics
In the midst of one of the most dramatic FTSE 100 stock rallies in living memory, independent analyst Alistair Strang thinks the iconic engine maker may have more fuel in the tank.
9th October 2024 07:19
by Alistair Strang from Trends and Targets
With Rolls-Royce Holdings (LSE:RR.) and their stunning reputation in jet engine manufacture, it must be admitted there are few companies more deserving of trust when they have successfully knocked together modular nuclear power generation plants, their designs now approved in the USA.
Essentially, this is a regime where a few big trucks can park beside a source of water, then produce sufficient electricity to charge a Tesla or provide power for an entire city. With the US seeming to find its infrastructure trashed in different areas by weather events, there must be a growing awareness mobile nuclear power perhaps shall not be a bad thing. And if it comes with a Rolls Royce logo, so much the better.
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Rolls Royce's share price has been climbing quite remorselessly during 2024, thankfully paying visual homage to our prior target levels of 309p and 397p.
For a while, we suspected it may be “stuck” at the 309 level, until in February this year the market opted to gap the price up to 355p and get things moving. Once again, things stalled at the 397 level until. Once again, the market gapped the share price upward toward the end of March this year.
With price gains again kick-started, Rolls Royce finally hit a high of 535p a few weeks ago, the period since working hard to give the impression the rising cycle has again stalled.
We smell a rat.
While we suspect some dramatics shall be possible in the near term, with a chance of reversal to 494p, it feels like there is plenty of room for more positive gains. Our scenario is pretty unusual, suspecting the market may play ball by once again gapping Rolls Royce upward anytime soon, preferably above 550p, as this trigger calculates with an initial target of 642p.
In the event such a level is exceeded, we can introduce a long-term target of 721p and that’s it. The share price shall either need a really convoluted path to 721p, or the market will need to keep gapping it up at the open for us to be gifted with the ability of calculating beyond 721p.
And of course, there’s always the classic danger of us thinking we understand what’s happening with this share price and, unfortunately, usually when someone is convinced they know what’s going on, that’s the point where the universe gives a lazy grin and says “gotcha”.
Our only defence at this point needs RR to close a session below 494p to justify panic.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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