Rolls Royce shares OK for civil aviation, but investment in small nuclear reactors is risky

Will going nuclear send Rolls-Royce shares into meltdown?

Dr James Fox takes a closer look at Rolls-Royce shares. What’s next for the British engineering giant after the recent rally came to an end in March?

The Motley Fool, Dr. James Fox 23 Apr 23

Rolls-Royce (LSE:RR) shares have been red-hot in recent months, going from strength to strength. But the FTSE 100 stock has plateaued since March.

So what could drive the share price forward in the coming years? Could it be Rolls-Royce’s entry into the nuclear space?

Rolls-Royce (LSE:RR) shares have been red-hot in recent months, going from strength to strength. But the FTSE 100 stock has plateaued since March.

So what could drive the share price forward in the coming years? Could it be Rolls-Royce’s entry into the nuclear space?

For some, the jury is out on the future profitability of the modular nuclear reactor programme — the plan was given government approval and funding last year.

………. In theory, Rolls would ‘mass produce’ these small reactors, with a capacity of 470MW, and sell them for around £2bn.

………..there are challenges. First among them are reports that the UK government is preparing to invite international bids for next-generation nuclear power projects, thus removing its backing for Rolls-Royce’s product in development.

With billions of forecast development costs, it would be disastrous if the government started to favour other companies — the share price would really suffer.

What matters more?

The nuclear programme is interesting but, in reality, other sectors are more important — for now at least. In the near term, I’m hoping to see more signs of the recovery in civil aviation. This is Rolls’ biggest sector and a post-pandemic recovery will propel the company forward.

…………………..Despite the risks in the SMR space, I’m not fearing a share price meltdown.  https://www.fool.co.uk/2023/04/23/will-going-nuclear-send-rolls-royce-shares-into-meltdown/
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April 24, 2023 - Posted by Christina Macpherson | business and costs, Small Modular Nuclear Reactors, UK