The FTSE 100 is flirting with record highs and much of that is down to the performance of aerospace and defense company Rolls-Royce RR.
The shares, up over 51% already this year, have been pulled higher and higher by the European defense stock rally and have just hit a new high. This makes Rolls-Royce the sixth largest UK company, with British American Tobacco only just ahead of it.
Rolls-Royce received another boost this week after winning government backing to build Britain’s first small modular nuclear reactors at Sizewell C in Suffolk.
The company will build three units in the UK which are expected to power 1.5 million homes after completion.
In Chancellor Rachel Reeves’ spending review this week, she name-checked Rolls-Royce as a “a great British company” and reiterated the commitment to Britain’s nuclear power industry.
Is Rolls-Royce Stock a Buy, Sell or Hold?
As well as nuclear power, the company is also set to benefit from increased UK defense spending as the prime minister commits to moving the UK to a state of “war-fighting readiness.” Rolls-Royce is still benefiting from the demand from commercial aviation too.
After this year’s gains, the stock is still trading as undervalued according to Morningstar metrics, trading just below the Morningstar fair value estimate of 960p.
Rolls-Royce releases eagerly awaited half-year results on July 31, when we get to hear the company’s outlook for the rest of the year.
