The Motley Fool

The Rolls-Royce share price has fallen. Is now the time to buy?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A Rolls-Royce employee works on an engine
Image: Rolls-Royce

Shares in Rolls-Royce (LSE: RR) have fallen more than 20% from their high last month. Over the past year, they have dropped dramatically and struggled to recover from March 2020 when the pandemic began, with the Rolls-Royce share price falling as low as 64.86p at the end of October. There has been a strong recovery since then, with the share price back to 109p at the time of writing.

Below are some of the reasons why the share price might be down.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Reopening prospects mixed

Recently, Rolls-Royce shares have tended to do well when there has been more optimism about the world opening up and return to international travel as we used to know it. A large part of the company’s business relies on there being international travel due to its aircraft engine business.

The easing of restrictions in the UK has so far been a success and the vaccine rollout is also on track, which is allowing optimism over being able to travel abroad again this summer. However, countries such as India and Kenya have seen a dramatic rise in Covid-19 cases, which may make it harder to travel to these countries in the short term.

In my opinion, I expect that travel reopening may not be perfect in the short term but I am optimistic that this form of cash flow for Rolls-Royce should be resuming sooner rather than later.

Lack of news

Another issue behind the share price of Rolls-Royce is likely to be the fact there has been no important news from the company recently.

The lack of news is a possible factor in the share price with no catalyst to get shareholders excited about. 

Underlying investment case hasn’t changed

From a month ago there has been no real change in the prospects of Rolls-Royce, with the future climate looking the same and global travel still expected to improve and get back to normal.

I am bullish on Rolls-Royce and see the drop in the last month as a buying opportunity for investors. With the world starting to open up – and it will do further in the coming months – this is only going to benefit Rolls-Royce. Of course in the short term, things may change but the long term should see the shares in the company increase in value. I am seeing the current price as a great buying opportunity and a great discount to investors.

The risk to the share price

Many investors will remain wary of Rolls-Royce at the moment and for good reason. The reason for this is the lack of control the company has in its own success at the moment.

The success of the company going forward is heavily reliant on the pandemic and restrictions across the UK and the world easing. However, in the long term, the Rolls-Royce share price should recover its recent losses, which is why I am very bullish on the company.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Ed Jones owns shares in Rolls-Royce. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.