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Rolls-Royce (LSE: RR) shares recently hit another all-time high, soaring above 1,100p (£11). This easily makes Rolls the best-performing FTSE 100 stock over two (+427%), three (+1,210%), and five years (+1,152%).
As someone who first invested at a much lower price in 2023, I’m obviously over the moon. But this now begs the question, should I crystallise gains and move onto pastures new? Here’s how I’m thinking about things.
Growth engine
When assessing my growth stocks, I first ask whether the engine’s still purring. If it is, the business would ideally be firing on all cylinders, scaling fast, and gaining momentum. If it’s spluttering, well, I might consider selling up.
Let me give a couple of simple examples to show what I mean.
In its Q1 2026 earnings, Nvidia reported year-on-year revenue growth of 69% ($44.1bn), and expects about another 50% increase in Q2 ($45bn). CEO Jensen Huang commented: “Countries around the world are recognising AI as essential infrastructure — just like electricity and the internet — and Nvidia stands at the centre of this profound transformation.”
Meanwhile, Shopify just reported Q2 revenue growth of 31% ($2.7bn). CFO Jeff Hoffmeister said: “Merchants of every size — from first-time founders to global brands — are choosing Shopify to grow their businesses and their success is what is driving our success.”
As we can see, these growth engines are purring away nicely. Both stocks are booming.
But what about Rolls-Royce, the maker of high-quality engines? Well, revenue grew by around 10.7% in the first half (£9.1bn), while underlying operating profit surged 50% to £1.7bn.
Full-year operating profit guidance was raised to £3.1bn-£3.2bn, and the mid-term target of £3.6bn-£3.9bn was reaffirmed. But CEO Tufan Erginbilgic stressed that this target is “a milestone, not a destination, with substantial growth prospects beyond the mid-term.”
Stepping back, I agree that Rolls-Royce has attractive long-term growth opportunities across its business. The core Civil Aerospace should benefit from rising global travel, while Defence and Power Systems are likely to thrive as European military spending is ramped up over the next decade.
Additionally, as Europe invests to hit Net Zero targets, the small modular reactor (SMR) opportunity appears substantial. Large artificial intelligence (AI) data centres may one day need their own SMRs. Rolls-Royce says this nascent business will be profitable and free cash flow positive by 2030.
Considering risks
Given all this, I see no reason to sell my shares. However, there could be potential risks that might persuade me to.
For example, Rolls-Royce has repeatedly warned about supply chain challenges. These could throw a spanner in the works moving forward, especially when the impact of President Trump’s tariffs likely kick in later this year.
Also, a ridiculously high valuation could force me to take some chips off the table. That’s because Rolls could quickly become a victim of its own success if growth targets are missed, even modestly.
Based on forecasts for 2026, the forward price-to-earnings ratio here’s around 36, falling to 32 by 2027. That’s pretty high for the FTSE 100 engine maker. A price-to-sales ratio of 4.7 also doesn’t exactly scream value.
That said, I don’t think the stock’s ridiculously overvalued. My view is that Rolls could still go higher from here.
Weighing things up then, I’m holding on to my shares.
