I was afraid that in the stock market in 2020 Rolls-Royce Holdings (LSE: r.) Actions may fall on nothing. I saw a very real chance that the company could break when aviation seriously harms its activities and a huge debt building.

I was wrong, right? The price of Rolls-Royce shares increased by 785% in five years. This is a combined result of stunningly rapid development of Covid vaccines in combination with first -class employees. And of course the disk that Tufan Eggilgiç brought to the company.

To fold the headline, this raise would be enough to shorten every 5 pounds invested in Rolls-Royce, and then now at 44.25 £. Or £ 100 to 885 £ and £ 10,000 at 88,500 £. Or … you get a picture and it is pink.

What should we do now?

It’s all good and good. But this absolutely says nothing about the next five years.

In retrospect, it is a bad tool for making investment decisions. In fact, this is not a tool. I will always remember my friend’s words many years ago who noticed: “You certainly know how to choose a supply that has already gone“.

Rolls-Royce can tomorrow the breakthrough of the Aero engine, which will seriously raise the profits. Or maybe there were some expectations in one quarter, which may cause a collapse of the share price.

Currently, I see the growing signs that investors are increasingly expecting companies to overcome expectations. And just getting closer to forecasts can be seen as a failure. Again, the actions can fall.

This can be the biggest risk now, especially because the price of the shares has gained so much. I am convinced that there is an truthful percentage of shareholders who liked to ride and are looking for the first sign that they should get off.

Return to the basics

Now I see only one reasonable approach to the Rolls-Royce action. To forget about the past that has nothing more to say to us. Instead, look at basic valuations and forecasts and base our decisions on them.

By doing so, I have the impression that Rolls-Royce can still be a decent value. We look at the forecast price -profit ratio of over 35 years. FTSE 100 average. I would put it down from a economical scream.

But a few things make me think that it really can’t be much. First of all, earning growth forecasts suggest that P/E may drop to around 26 to 2027 in the case of a company with long -term growth potential, which can be attractive.

Until then, the forecasts also provide for net cash of 7.2 billion GBP in the balance sheet. Adapting to this, I calculate the effective 2027 p/e for the company 23.

Everything can happen

It looks attractive to me. But maybe it flows a bit close to the wind and there may not be much safety margin. But Rolls-Royce shares must be worth considering for long-term growth investors. Even if they have already come.