Rolls-Royce (LSE: RR) shares have really had a torrid time over the past two years. The company’s transformation plan was just getting started as the pandemic slammed into the aviation industry at the beginning of 2020.
Over the past two years, the disruption of the pandemic has gutted the sector, bringing the corporation close to its knees. Rolls might not have survived without a significant fundraising and aggressive cost-cutting programme.
But the company did survive. And now it is on the warpath.
Rolls-Royce shares have potential
With a lower cost base and more refined operational structure, the company is looking to capitalise on growth opportunities in the aviation industry over the next five to 10 years. It is investing heavily in its existing product, as well as more fuel-efficient engines and electric aviation technology.
This puts the company at the forefront of the green energy revolution. It could generate significant returns if the business manages to make a breakthrough.
The group is also making significant headway with its small modular nuclear reactor plans. It has submitted plans to the regulator, which will consider the development potential over the next couple of years. These reactors have the potential to revolutionise the energy market not just here in the UK, but internationally as well.
They can produce clean, efficient and scalable energy solutions for the world as it tries to move away from hydrocarbons. By reducing the cost of nuclear energy, the company could open up significant markets around the world, which have been unable to foot the bill for this technology in the past.
Unfortunately, this is not an immediate solution to the world and the company’s problems.
It is going to take at least a decade for this technology to come to the market. Rolls’ electrical aviation technology is also in its early stages of development. Neither of these initiatives are likely to be an immediate solution to the company’s problems. One or both of them may ultimately fail and lump the corporation with significant, irrecoverable costs.
Still, despite these challenges, I think the Rolls-Royce share price has tremendous potential over the next 10 years.
Green energy champion
In fact, I think the stock could be about to take off as it becomes a renewable and green energy champion.
Its technologies might not be popular with everyone, and they may take some years to generate results for the company and its shareholders. Still, they have tremendous potential, in my opinion.
Those are the reasons why I believe Rolls-Royce shares could be about to take off. These are also the reasons why I would buy the stock for my portfolio today as a long-term speculative investment.
As the corporation capitalises on these growth opportunities, I think the market will revisit its potential.