Raising buy limit on Rolls-Royce, plus four new reports available
19th February 2025 |
Rolls-Royce (RR.L) is in the midst of a transformation that makes it one of the most compelling investment opportunities in our portfolio.
With its leadership in small modular reactors (SMRs), a booming civil aerospace segment and strong government support, it’s time to raise our buy limit on this stock.
After all, Rolls-Royce is spearheading the UK’s clean energy future with its SMR technology.
These factory-built reactors offer a cost-efficient, zero-carbon power solution, making them essential to Britain’s AI infrastructure and global energy needs. The UK government is backing this technology, and Rolls-Royce is well-positioned to dominate this space.
Notably, the company’s SMR division has already secured international interest, with the Czech Republic among its first buyers. As the UK’s approval process nears completion, Rolls-Royce is on the verge of securing a long-term revenue stream that could rival its aerospace business.
But beyond SMRs, Rolls-Royce’s civil aerospace division is thriving. Engine flying hours now exceed pre-pandemic levels, driving strong revenue and profit growth. Meanwhile, the defence sector is another bright spot, with multi-billion-pound contracts, including a £9 billion deal for the UK’s nuclear submarine fleet.
Under CEO Tufan Erginbilgiç, Rolls-Royce has drastically cut costs, slashed debt from £3.3 billion to £820 million and reinstated its dividend. With operating profit expected to rise to £2.5-£2.8 billion by 2027, the company’s turnaround is undeniable.
With multiple growth engines firing, it’s time to raise the buy limit on Rolls-Royce (RR.L) to 775p. Investors should position themselves now before the next wave of gains.
Four new reports on the website
While I’ve got you, please be aware that there are four new reports available in the Special Reports section of the Southbank Growth Advantage members area.
The names of the reports are:
- Britain’s Number One AI Chipmaker – Cambridge’s Trillion-Dollar Secret
- Clean Power, Clear Profits – The Energy Pioneer Igniting Britain’s AI Future
- Power & Pride – Britain’s £3 Trillion Nuclear Opportunity
- The Two Private Companies Set to Reach Multi-Billion Pound Status
The first three reports are updated versions of already-published recommendations (Arm Holdings, Solaria Energia and Rolls-Royce, respectively) for new subscribers. Please be assured there is nothing new here you need to be aware of, but they are worth a look if you want to want to re-familiarise yourself with these recommendations.
The last report contains completely new information on two companies involved in the buildout of AI growth centres in the UK. Please note that these are not new recommendations, but companies I believe are worth keeping an eye on – so make sure to check that out.
Until next time,
James Allen
Co-editor, Southbank Growth Advantage
