Rolls-Royce share price is cruising: is it a good buy now?

on Nov 14, 2022
  • The Rolls-Royce stock price has surged by 40% from its lowest point this year.
  • Its business is booming as the civil aviation and defence business rebounds.
  • China’s decision to reduce its quarantine days is a good catalyst.

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Rolls-Royce (LON: RR) share price has staged a strong comeback in the past few months. The stock surged to a high of 90p, which was the highest level since August 3rd of this year. It has recovered by about 40% from its lowest level in October.

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Rolls Royce strong demand

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Rolls-Royce’s business is seeing a strong demand as its key sectors do well. Its civil aviation segment is performing well as the aviation business rebounds. Most airlines like IAG, United Airlines, and Delta have all seen vibrant demand in the past few months.

Rolls-Royce is also seeing strong demand in its defence business as countries boost their military capabilities. Countries like the United States, UK, and Germany have all pledged to boost the amount of money they spend in the sector. Rolls-Royce, a leading player in the industry, is expected to benefit. It serves over 400 airlines globally.

The same is true for its Power Systems segment, where the number of order intake continue bouncing back. Some of its order intake included an order of over 500 mtu engines for the UK military. 

Last week, the company published a mixed trading statement. The firm said that its large engine flying hours continued their recovery. They are now about 65% of 2019 levels, with strong recovery in the United States and Europe. The Chinese and Asian business has held back this growth.

The private jet industry has boomed above 2019 levels. Notably, the company will likely benefit by the regulatory clearance of Boeing 787 aircraft and the recent decision by China to reduce its quarantine days. Therefore, there is a high likelihood that the Chinese business will continue doing well in the near term.

Therefore, there is  high likelihood that the company’s business will continue doing well. Another catalyst will be the weak British pound and the fact that the stock is undervalued as I wrote in this article.

Rolls-Royce share price forecast

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Rolls-Royce share price

Is it safe to buy Rolls-Royce shares? The 4H chart shows that the RR share price has been in a strong bullish trend in the past few days. In this period, the stock has managed to move above the 78.6% Fibonacci Retracement level. The stock also moved above the important resistance level at 81.15p, the highest point on September 12.

The shares have moved above all moving averages while the Stochastic Oscillator has moved above the overbought level. Therefore, the shares will likely continue rising as buyers target the key resistance at 95p. A drop below the support at 87p will invalidate the bullish view.


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