Here’s what £20,000 invested in Rolls-Royce shares in early 2024 would be worth today.

Rolls-Royce (LSE: RR) shares took off like a rocket in autumn 2022 and have been flying ever since. They are up almost 500% in two years. The one you need Nvidia anyway?

I tend to be wary of fast stocks thinking that sometimes, they will burn out. But what surprised me was that the share price of Rolls-Royce continued to shine in 2024.

It opened the year trading at around 297p. Today, it moves 587p. That’s an increase of 97.6%. There was no profit. That happened during the pandemic but should make a long-awaited return this year.

This FTSE 100 stock is the best in the world

If only I had the guts to invest my entire £20,000 Stocks and Dividends ISA in an ISA. FTSE 100 engineering giant in early 2024, I will have a net worth of £39,520 today. That shows the huge potential rewards of investing in individual stocks, rather than just tracking an index. Naturally, the risks are high as well.

I can’t count how much I would have had if I had invested £20,000 in a Rolls-Royce two years ago. That would just make me sad.

I’m holding this stock to play a role in its success but as always, the only question that really matters is where will Rolls-Royce go next?

I will make one confident prediction. The share price will not increase by 100% or 500% or anything like that. Transformative CEO Tufan Erginbilgic has sprinkled his magic, but hard work still lies ahead. With shares trading at 42.79 times trailing earnings, he can’t afford any slips. Rolls-Royce has growth value, and it better deliver it.

Erginbilgic deserves his first success for working hard to change the company’s culture, improve its efficiency, reduce costs and increase margins. He also got lucky, timing his arrival just before the post-Covid recovery in global aviation, which has revived demand for the company’s jet engines and aftermarket services.

Rolls-Royce isn’t just about aircraft engines, of course. The Q3 results, published on November 7, showed strong demand remaining in all three categories: civil aerospace, defense and energy systems.

Growth will be very slow

The group is also moving towards green technologies, such as small nuclear reactors and sustainable jet fuels. Fortunately, this could drive long-term value, but that is far from guaranteed.

Recession, global tensions and supply disruptions could all wipe out Rolls-Royce by 2025. Its Trent 1000 engines remain controversial, along with US rivals. Boeing show us the pain that technical problems can bring to a company’s value.

The 12 analysts providing one-year share price forecasts for Rolls-Royce have generated an average target of 609.6p. If true, that’s a slight increase of 4.2% from today. That’s a bit of a letdown, after all the recent excitement. Stocks do better when we get broader economic recovery. That too is in moderation.

Eight analysts have rated the stock with a Strong Buy rating, while two others have rated it a Buy. Only one calls it Strong Sell.

Anyone who comes into this stock today has to accept that they are missing out on the best. It feels like wandering through a movie as the credits roll. I’m still holding on to my Rolls-Royce shares for a long time, but I won’t be investing more. And certainly not £20,000.