Rolls-Royce (LSE:RR) The stock took off like a rocket in the fall of 2022 and has been rising ever since. They increased by almost 500% in two years. Who needs it Nvidia Anyway?

I’m generally cautious about momentum stocks, assuming they will burn out at some point. However, to my surprise, the Rolls-Royce share price continued to rise in 2024.

It started the year trading at around 297p. Today it’s poking 587p. This represents an augment of 97.6%. There was no dividend. This took place during the pandemic, but this year should see a long-awaited return.

FTSE 100 shares are a global hit

If I were brave enough to invest all my £20,000 in a Stocks and Shares fund FTSE100 engineering giant in early 2024, today I would be worth a whopping £39,520. This shows the greater potential benefits of investing in individual stocks rather than just tracking an index. Naturally, the risks are also higher.

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 gloomy.

I own these shares so I have been part of their success, but as always, the only question that really matters is: where does Rolls-Royce go next?

I will make one certain prediction. The stock price won’t go up 100%, 500% or anything like that. Transformational CEO Tufan Erginbilgic has worked his magic, but there is difficult work ahead. With the stock trading at 42.79 times trailing earnings, it can’t afford any slip-ups. Rolls-Royce is priced for growth and better delivered.

Erginbilgic deserves its early success by working difficult to change the company’s culture, augment its operational efficiency, reduce costs and augment margins. He was also lucky to arrive just before a post-Covid recovery in global aviation revived demand for the company’s jet engines and after-sales services.

Of course, Rolls-Royce is not only about aircraft engines. Third quarter results, published on November 7, showed continued mighty demand in all three sectors: civil aviation, defense systems and energy.

Growth will be much slower

The group also focuses on green technologies such as miniature modular nuclear reactors and sustainable aviation fuels. If you’re lucky, this may provide long-term value, but it’s not guaranteed.

Economic slowdown, geopolitical tensions and supply chain disruptions could push Rolls-Royce off course in 2025. Its Trent 1000 engines remain controversial and an American rival Boeing showed us just how much damage technical problems can do to a company’s share price.

The 12 analysts offering one-year share price forecasts for Rolls-Royce set an average target of 609.6p. If true, that would represent an augment of a modest 4.2% compared to today. It’s a bit gloomy after the recent emotions. Stocks will do better if there is a broader economic recovery. This is also in balance.

Still, eight analysts rate the stock as a Strong Buy and another two rate it as a Buy. Only one calls it a mighty sell.

Anyone who comes to these exchanges today must admit that they missed the best part. I feel like I’m entering the movie the moment the credits roll. I will hold Rolls-Royce shares for the long term, but I will not invest more. And certainly not £20,000.