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Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Rolls-Royce (LSE:RR) shares have gone up exactly 1,000% in five years, according to my data provider. There\u2019s a beautiful symmetry to that return!<\/p>\n
However, the FTSE 100 stock has come off the boil recently, falling 18% since early March. This is due to a combination of factors, including rising jet fuel costs, cancelled flight routes, and cautious forward guidance from rival widebody engine maker GE Aerospace.<\/p>\n
AGM incoming <\/p>\n
Arguably then, what the stock needs is a positive catalyst. Rolls\u2019 annual general meeting (AGM) will be held tomorrow (30 April), so we might get a trading update confirming that full-year guidance is still on track (or not).<\/p>\n
After that, the next major catalyst will probably be the firm\u2019s half-year report, which is due late July. The stock tends to see a lot of action one way or the other after the interim results (usually up in recent years).<\/p>\n
As a reminder, Rolls has guided for full-year underlying operating profit of \u00a34bn\u2013\u00a34.2bn, and free cash flow of \u00a33.6bn\u2013\u00a33.8bn.<\/p>\n
The company has been masterful at setting ambitious targets then demolishing them. But that might be getting harder due to the difficult backdrop of restricted airspace and cancelled flights.<\/p>\n
SMRs are huge business <\/p>\n
Clearly, the near term is looking tricky and this adds risk. However, as a shareholder who\u2019s more interested in the next decade, I remain very bullish, especially on small modular reactors (SMRs). Or mini nuclear reactors.<\/p>\n
If Rolls manages to become a global leader in this space, as it expects to, the opportunity could be enormous. How big? Well, the International Energy Agency (IEA) sees SMR total capacity potentially reaching 120\u00a0GW in 2050, with more than 1,000\u00a0SMRs deployed.<\/p>\n
Cumulative investment could top $670bn by 2050!<\/p>\n
Now, this is the IEA\u2019s bullish scenario, but the base case is SMR capacity reaching 40\u00a0GW. CEO Tufan Erginbilgic estimates as many as 400 SMRs by 2050.<\/p>\n
Whichever way you cut it, this is a high-growth market. Each unit will reportedly cost approximately \u00a32bn\u2013\u00a33bn, assuming the technology is capable of operating at scale (this isn\u2019t proven yet).<\/p>\n
Beating the drum <\/p>\n
Therefore, it was encouraging to read last week that UK government figures have been in Europe trying to drum up business for Rolls-made SMRs. According to The Telegraph, Business Secretary Peter Kyle has been talking to Sweden and other European allies.<\/p>\n
Rolls-Royce SMR has already signed contracts with the UK and Czech Republic to build mini nukes. In doing so, it\u2019s the only company with multiple contractual commitments to deliver SMR units in Europe.<\/p>\n
\u201cI\u2019m in advanced talks with Sweden. I\u2019m also beating the drum with other European countries and further afield,\u201d Kyle told The Telegraph.<\/p>\n
To be fair, Rolls is already in the final in Sweden along with GE Vernova to supply its SMR tech to state energy giant Vattenfall. But there\u2019s now talk that Germany is considering SMRs to increase its energy independence due to the 2026 disruptions.<\/p>\n
If Rolls-Royce SMR can attract orders from other major European countries, especially Germany, the stock should get a decent boost.<\/p>\n
Dip-buying opportunity? <\/p>\n
Even after falling 18%, the stock isn\u2019t cheap. We\u2019re looking at a forward earnings multiple of 29.<\/p>\n
But for investors willing to look beyond the near-term uncertainty, I reckon Rolls is worth a closer look.<\/p>\n
The post Up 1,000% in 5 years, but the UK government could send Rolls-Royce shares even higher<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Ben McPoland has positions in Rolls-Royce Plc. The Motley Fool UK has recommended GE Vernova and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Rolls-Royce (LSE:RR) shares have gone up exactly 1,000% in five years, according to my…\n","protected":false},"author":2,"featured_media":25069,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[11269,1238,9607,5,6],"class_list":{"0":"post-25068","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"tag-ge-aerospace","9":"tag-rolls-royce","10":"tag-smr","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116488706652189266","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/25068","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=25068"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/25068\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/25069"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=25068"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=25068"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=25068"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}