Rolls-Royce shares sure are popular today (8 April). As I type, they’re up 10% to 1,260p!
Only miners Antofagasta (+12.4%), Anglo American (+10.6%) and Fresnillo (+10.4%) top that in the FTSE 100, which itself is up 2.8% to 10,640. The Footsie has now jumped 7.5% in just over two weeks.
The jolt higher today means Rolls-Royce shares have gained 1,020% in the past five years. And it remains among the most popular shares bought on AJ Bell over the past week.
Why is everyone suddenly buying Rolls-Royce?
Reopening rally
Today’s powerful rally was driven by the two-week ceasefire agreed between the US and Iran. Crucially, this will see the Strait of Hormuz reopen.
Consequently, oil has fallen below $95 a barrel, sending oil stocks BP and Shell down 5.3% each.
Investors are now wagering that the conflict won’t result in higher interest rates, as previously feared. Hence why we see a broad-based rally, with gold miners and airline stocks leading the charge.
Since it started, the conflict has severely disrupted air travel across the Middle East. But with airspaces reopening and jet fuel costs coming down, anything related to tourism (including engine-maker Rolls-Royce) is also taking off today.
Not out of the woods
Of course, this rally could quickly fade, or even reverse completely as the end of the two-week ceasefire approaches. And even after the fall today, oil is still 44% higher than a year ago.
The global economy is not out of the woods yet.
As for Rolls-Royce, the stock is trading at roughly 33 times forward earnings. So while still bullish long term, I’m not interested in buying more shares at the moment.
Under-the-radar UK share
One stock I do find interesting is Rosebank Industries (LSE:ROSE). Since listing in July 2024, it has largely been in the shadows, drifting lower to sit at 332p today.
So, what does it do? Rosebank was founded to acquire underperforming industrial companies, which it attempts to improve and make more profitable, before eventually selling them on for a profit.
If this buy-improve-sell strategy sounds like Melrose Industries from the FTSE 100, well that’s because Rosebank was set up by former Melrose directors. Below, we can see the significant shareholder value created in the 20 years they were there.
Rosebank made its first acquisition — wire‑harness maker Electrical Components International (ECI) — last year for around $1.9bn. And just last month, it said it would buy two US-based businesses, MW Components and CPM, in a deal worth just over $3bn (£2.28bn).
Last year, revenue was $445m, with an adjusted pre-tax profit of $52m. However, this only reflects a four-month period for ECI under Rosebank’s ownership. So it’s still very early days.
Now, there are no guarantee that the company will replicate the success of Melrose. And it will need to raise significant amounts of cash and/or debt to fund acquisitions, which could take many years to spruce up and sell on.
However, the management team has vast experience and a tried-and tested-playbook. And £3.28bn-cap Rosebank plans to join the main market from AIM, which may see it join the FTSE 100 one day, assuming things go to plan.
Definitely a stock to keep an eye on at 332p, in my opinion.
