The Rolls-Royce Holdings PLC (LON: RR) share price has been trading in a range since March 2023 as buyers and sellers strive for control. The sideways price action continues to date as the RR share price is now in the middle of the range.
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Despite the range-bound price action, Rolls Royce shares are still up 58.35% this year, buoyed by positive investor sentiment towards the plane engine maker and the recovery in its business as global long-distance travel resumed reigniting demand for the servicing of its wide-body long-range plane engines.
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The appointment of a new CEO, Tufan Erginbilgic, on 1 January 2023 also contributed to the company’s rally, given the significant changes the new CEO wants to make. The CEO recently abandoned a government project regarding sustainable aviation fuels that are far from commercialised.
Rolls Royce has benefitted significantly from the cost-saving measures implemented over the past few years, intensified by the new CEO, keen on returning the company to profitable growth soon.
The aviation giant has ambitious cash flow targets, which analysts believe can be hit if the company remains disciplined. The recent recovery in flying hours will increase the demand for its maintenance services on planes using its large engines.
However, most global travel remains based on small body planes with much smaller engines than what Rolls Royce makes, and it would be exciting for the company to launch smaller engines targeted at this lucrative market segment sometime in the future.
The recovery in the civil aviation division has also been supported by its military contracting business, where the firm is still executing US military contracts worth $1.8 billion over five years. The contract was won in September 2022.
Rolls-Royce remains an excellent bet for investors in the aviation industry, but I would wait for the stock to break out of the range before buying or selling. A break below the range would offer a better buying or selling opportunity, while a break above would signal a continuation of the bullish momentum.
*This is not investment advice.
Rolls Royce (LON: RR) share price.
The Rolls Royce (LON: RR) share price has been trading in a range since March 2023. Can it break out?
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