The Rolls-Royce share price had a strong month in August 2021. The RR stock jumped by more than 20% even as the FTSE 100 index rose by just 3%. As a result, the company became the best-performing stock in the index followed by Prudential, Flutter Entertainment, and JD Sports.
RR had a strong month, helped by the overall financial performance of the first half of the year. The company said that it made a profit of more than 300 million pounds for the first time since the pandemic started.
The stock was also a pivotal one for the company as the number of aircraft orders by companies like Delta and United rose. While the planes ordered by these firms will not be powered by Rolls Royce engines, the orders send a good message about the aviation industry.
Still, the biggest concern for Rolls-Royce and other firms in the sector is that the number of Covid cases is rising in most countries. Indeed, on Monday, the European Union removed the US from a list of safe countries. This is despite the fact that the US is one of the most vaccinated countries in the world.
The situation worsened on Monday when the US raised the alert level on Switzerland, Germany, and Canada. The latter two were moved to level 3 while Switzerland moved to level 4. Similarly, New Zealand and Australia are yet to reopen. Therefore, this raises the risk that the aviation sector will take more time to recover.
Rolls-Royce share price will be in focus in September for several reasons. First, investors will be watching at the Covid developments around the world.
Second, the company has announced a plan to revamp its team of analysts. According to the Telegraph, the company is running a beauty parade of brokers as it considers replacing Jefferies and Morgan Stanley.
Third, the company’s key investor is calling for a board refresh and urging the company to do away with its power business that brings in more than 3.5 billion pounds. The investor, Causeway Capital Management, believes that the company could achieve a better valuation as an aerospace and military contractor.
On Monday, I published an article in which I highlighted the new risks facing Rolls-Royce. This article came before the news of Causeway and the beauty parade came. The article concluded that the stock could keep rising in September as bulls target the key resistance at 130p.
On the four-hour chart, we see that the stock has already cleared the key resistance at 113p and done a break and retest pattern. It is also being supported by the 25-day and 50-day moving averages. Therefore, I still believe that the shares will keep rising in September.