Rolls Royce Share Price: Rolls-Royce (LSE) has had an impressive run over the past year, becoming one of the FTSE 100’s top success stories. With the share price climbing 263% in the last 18 months, it’s natural to wonder if there’s still room for growth. According to CEO Tufan Erginbilgiç, the answer is a resounding yes. Here’s a look at three key areas that could fuel Rolls-Royce’s continued rise in the coming years.

Sustainable Aviation Fuel (SAF) Leading the Way

The aviation industry is rapidly moving toward sustainability, with sustainable aviation fuel (SAF) set to play a major role over the next 20 years. Rolls-Royce has a significant advantage here, as all its engines are already compatible with 100% SAF. This gives the company a head start over competitors as the shift to SAF becomes more widespread.

Although SAF currently costs two to seven times more than conventional jet fuel, regulations and incentives for airlines could help increase its adoption. With global emissions targets becoming stricter, Rolls-Royce is in a strong position to benefit from this trend if the industry embraces sustainable fuel.

Expanding Into the Growing Narrow-Body Aircraft Market

For over a decade, Rolls-Royce has focused exclusively on engines for wide-body aircraft. However, Erginbilgiç sees potential in the narrow-body aircraft market as well, which is experiencing significant growth. Rolls-Royce plans to enter this market through partnerships with leading aircraft manufacturers like Airbus, using its UltraFan technology, which offers a 10-15% increase in engine efficiency.

This move could open up a large new revenue stream for the company. While partnering with other companies could carry some risks, especially as Boeing and Airbus face production and quality challenges, Rolls-Royce’s advanced technology positions it well for long-term growth.

Small Modular Nuclear Reactors (SMRs) as a Future Energy Solution

Nuclear energy is gaining traction as an essential power source, particularly in Europe, and small modular reactors (SMRs) are at the forefront of this shift. These reactors are more flexible and cost-effective than traditional large reactors, making them a practical solution for many countries. Rolls-Royce has a leadership position in the SMR space and is currently the only company to have reached the second phase of the UK’s approval process for commercializing this technology.

Developing this supply chain will take time, but with global focus on net-zero emissions and energy security, SMRs could become a vital part of Rolls-Royce’s growth over the next decade.

Is It Too Late to Invest?

With Rolls-Royce’s share price having surged over the past year and a half, some investors may wonder if they’ve missed the chance to buy in. While it’s true that early investors may have gotten the best price, Rolls-Royce’s continued innovations in sustainable fuel, narrow-body aircraft engines, and SMRs suggest there’s still significant growth potential. If these opportunities unfold as expected, the share price may keep climbing, making Rolls-Royce a stock worth considering for the future.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor or conduct your own research before making investment decisions.