Rolls-Royce (LSE: RR) is one of the few FTSE 100 stocks that, as my Motley Fool colleague Rupert Hargreaves pointed out, has essentially gone nowhere over the past 12 months. It’s pretty much flat since the start of 2021 too. But looking a little closer, we can see the the Rolls-Royce share price has actually been through a lot of short-term ups and downs.
Looking at June alone, Rolls shares have lurched between a high of 113.5p and a low of 104p. That’s a swing of 9% from lowest to highest, and way more volatile than the Footsie. Similarly sized ups and downs have been going on for months. It’s as if investors keep wanting to get in, keep thinking maybe the time is ripe for the recovery to start… and then it doesn’t take off and fades again, until the next time.
I know it’s dangerous to read too much into short-term share price volatility. And I would never make an investing decision based on what the Rolls-Royce share price has done over the past few months or so. But if my speculations on investor sentiment are anywhere near the truth, they’re really just reflecting my own thoughts.
I like the company
The thing is, I’ve liked Rolls-Royce for a long time. And it’s one company that I’d really like to buy a chunk of at a cheap price. The company had hit a tough patch even before the pandemic brought a near halt to aviation. I reckon that presented a good buy at the time for investors with a long-term horizon. But it’s history now.
I really do think the Rolls-Royce share price will recover from its current hammering. The only thing I just can’t get my head round is how long it might take for a sustainable profits recovery to set in. Oh, two things — and whether Rolls has the liquidity needed to see it through to such times. If it hasn’t, we might see further falls.
In the past month, I can’t help feeling the delayed lifting of the UK’s final Covid-19 restrictions has made investors a bit twitchy again. Right now, Boris Johnson has said it’s “looking good” for the new target date of 19 July to be met. But, well, he’s said a lot of things over the years.
Rolls-Royce share price uprating?
So what are my thoughts now about the next stage for Rolls as an investment? To turn my own sentiment sufficiently bullish, I think I’ll need to see a positive set of results. In particular, I want to see how the balance sheet and cashflow situation are looking. Once we see clearer developments on those fronts, if we see them, I can see the Rolls-Royce share price enjoying an uprating.
When might that come? First-half results should be with us on 5 August, and that’s really not very long now. By then, we should have firmer news on the pandemic front. And, hopefully, a bit of confidence returning to the aviation business. I’ll be waiting at least that long before I finally decide, and possibly a good bit longer. I think there’s probably a 50/50 chance that I’ll end up buying Rolls-Royce shares one day.
Alan Oscroft has no position in any of the shares mentioned. 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.