The Rolls-Royce (LSE:RR) share price has had a bit of a rocky start to 2022. In fact, since the year began, the stock has fallen by nearly 12%. But it’s worth noting that over the last 12 months, the investor return is still over 10%.

Despite what the recent trajectory would suggest, analyst forecasts remain bullish. So, what’s behind this optimistic view for the Rolls-Royce share price in 2022? And should I be considering this business for my portfolio? Let’s take a closer look.

Encouraging progress begets investor confidence

Rolls-Royce has multiple divisions, but it’s best known for its operations within the aerospace industry. Unsurprisingly, the company’s revenue stream was decimated during the height of the pandemic. With flights being constantly cancelled and borders closed, the need for new aircraft engines or maintenance of existing ones seemingly disappeared overnight.

This is the primary reason why the Rolls-Royce share price plummeted in 2020. However, recently the outlook for this company has significantly improved. The pandemic is still, but international travel is starting to ramp up again. That’s obviously good news for the group’s revenue stream.

Meanwhile, management is currently executing a drastic restructuring of the entire business. While thousands of employees have sadly lost their jobs, the company has so far achieved over £1bn in annualised savings. At the same time, non-core parts of operations are being disposed of to shore up the balance sheet. To date, around £2bn has been raised. Just this month, the company completed the sale of its Bergen Engines business, adding another €91m (£76m) to the books.

Combining the healthier balance sheet with a recovering top line is an encouraging sight. And providing that the travel sector continues its steady recovery, I think it’s reasonable to say that the Rolls-Royce share price can continue to climb in 2022.

Risks to the Rolls-Royce share price

As promising as the recent performance may be, the group’s recovery prospects seem to be largely dependent on external factors. While the Omicron variant appears to be less severe, it’s significantly more transmissible than Delta. If infection rates get too high, borders may once again close. But even if that doesn’t happen, the recovery speed of the travel sector will likely slow, as individuals avoid travelling out of fear of getting infected.

Needless to say, this wouldn’t bode well for the share price. And while the recent disposals have provided greater flexibility and liquidity, a prolonged delay of the return to a pre-pandemic environment could be disastrous for this business.

The bottom line

All things considered, my views on Rolls-Royce and its share price have become more optimistic in recent months. However, there are still too many unknowns for my liking. Therefore, as an investor, I’m not going to be adding any shares to my portfolio today.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Despite the Helium One (LSE:HE1) share price delivering a return of 60% over the last 12 months, it hasn’t been a smooth ride. In August last year, the stock plummeted by over 65%, leaving a bitter taste in shareholders’ mouths. Yet since the start of 2022, the Helium One share price has been back on the rise. What’s behind all this volatility? And should I be considering this young business for my portfolio?

What caused the share price to crash?

As a reminder, Helium One is an early-stage exploration company. And as the name suggests, it’s focused on finding and eventually extracting helium from the ground. The element has a wide range of applications in the medical and aerospace industries. But despite its abundance in the universe, helium has proven to be quite a challenging gas to get hold of. That’s because it rarely exists in deposits large enough to be economically viable to dig up.

So, I think it’s understandable why investors got excited when the company announced it had discovered a deposit with 138bn cubic feet of the stuff. This announcement seems to be the primary catalyst that drove the Helium One share price to as high as 29p last year – a 250% rise since the start of 2021!

However, a risk I pointed out back in May was the possibility of disappointing results from further tests. Lo and behold, that’s precisely what happened. Drilling tests at the Tai-1A well confirmed the presence of helium. But petrophysical analysis showed it didn’t exist as free gas and therefore cannot be extracted. Meanwhile, its second drilling site, Tai-2, could not confirm the presence of high-grade gas.

Needless to say, since Helium One’s share price was entirely elevated by expectations rather than fundamentals, these disappointing results were enough to send the stock crashing. But why is it now back on the rise?

Time for a comeback?

History likes to repeat itself. And that seems to be what’s happening with this business. Since the start of 2022, Helium One’s share price has climbed 78% so far.

The company recently completed a multispectral satellite spectroscopy study of the region it’s exploring. And in the 4,500 sq km area, multiple helium anomalies were detected that could be viable for extraction. The next stage is to start drilling to get more data on the quantity and quality of the gas.

The results are expected to arrive at some point in 2022. If they end up being positive, it’s possible that the Helium One share price could be on the verge of exploding even higher than in 2021. But of course, the complete opposite could happen as well.

Final thoughts

Investing in young exploration companies is fraught with risk. Just looking at the recent history of the Helium One share price is proof of that. But for investors willing to take that risk, the rewards can be enormous.

Personally, I’m not keen on speculating with my portfolio. For now, I’m going to wait and see what the drilling results look like before making a move.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Over a one-year period, the Peloton Interactive (NASDAQ:PTON) share price has really struggled. It’s down 85%, and closed yesterday at just $24. The last time is was this low was back in March 2020. Compounding the downward pressure was fresh news yesterday that saw Peloton shares fall 24% on the day. So at what point does the stock become a buy for me, or is it something to permanently stay away from?

Speculation hurting Peloton shares

I have to be careful noting the news from yesterday because technically nothing has been confirmed by the company. Media reports have claimed that the business is going to suspend production of the Peloton bike for at least a month “according to internal documents obtained”. This follows up on other reports circulating that the firm is planning on some store closures and layoffs.

Although I’ll have to wait to see whether/how much of these rumours are true, investors clearly haven’t decided to wait around. Some clearly think that the reports are true, hence the reason why Peloton shares have fallen.

Halting production or closing stores highlights that demand isn’t strong for core products. This could lead to lower sales, lower profit and a lower company valuation. 

In the short term, if the business comes out and refutes the claims, then Peloton shares could swiftly move higher. Yet I could see some truth in these reports. Back in November, I wrote about the company following poor results that were released. In the outlook for 2022, the business commented that “we anticipated fiscal 2022 would be a very challenging year to forecast, given unusual year-ago comparisons, demand uncertainty amidst reopening economies, and widely-reported supply chain constraints and commodity cost pressures”.

Therefore, in some ways the management team was preparing the market for the potential of underperformance. 

Potential long-term value

The question for me now is whether the company has long-term value. I find it interesting that at $24, the share price is back to where it was just as the pandemic hit. People staying at home turned into a huge bonus for the company, which grew substantially during 2020. So I don’t see any pandemic premium now built in to the share price. This makes the shares more attractive to me, as the share price hasn’t been bid up by speculative investors as much.

However, one of the primary reasons why the company has done so well is the pandemic and the restrictions that came with it. In my personal view, Covid-19 will be something that we will have around forever. But at the same time, I don’t see the world going back into a lockdown in the same way as 2020 or early 2021. So I think Peloton shares may not see their price above $100 for the foreseeable future.

I do think that the company will have to cut costs, trim down and rethink the strategy going forward. Yet fundamentally it’s in a good position in the sector and has a good product. Bringing this all together, I do think that in years to come, Peloton shares will be higher than $24, but won’t reach the heights seen last year. As a result, I’m considering a small investment in the company at the moment.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Peloton Interactive. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As a Unilever (LSE: ULVR) shareholder, I have been incredibly disappointed with its share price over the past couple of weeks.

After it was revealed that the company had tried to make an offer for GlaxoSmithKline‘s consumer pharmaceutical business towards the end of last year, shares in the consumer goods giant plunged more than 11% at the beginning of this week.

Even though the stock has recovered modestly from the low point, the shares are still off 17% over the past year, excluding dividends. 

Following this performance, as an investor, I have been trying to determine what is next for the business and if the stock will continue to remain under pressure in the near term. 

What’s next for the share price? 

It seems to me there are a couple of reasons why the market has been moving away from the company. Leaving aside the recent GSK deal fiasco for a moment, Unilever has been struggling to increase sales in an increasingly competitive environment.

The company’s competitive advantages, such as its global supply chain and distribution infrastructure, have helped it maintain some sales growth. Still, this growth has lagged peers in the consumer goods sector. 

Indeed, shares in one of the corporation’s largest competitors, Nestlé, have returned 21% over the past 12 months, excluding dividends. This means the stock has outperformed the ULVR share price by 37%. 

The company’s management is facing increasing pressure to reverse this trend. At the beginning of the week, the organisation presented the outline of its new plan to help change course. Management wants to refocus the business to higher-margin, higher-growth sectors like beauty and healthcare.

This is giving rise to speculation that the firm may start to divest more of its food and beverage brands. It has already agreed to sell its tea business, including household name PG Tips, to CVC Capital for €4.5bn. 

New strategy 

The company plans to provide further information on the new strategy over the next couple of months. It intends to release its results for 2021 at the beginning of February, and the City will be expecting additional information on the new strategy then. 

In the meantime, there are plenty of risks that could hold the business (and the ULVR share price) back. Inflation is affecting consumer confidence. This could cause consumers to move away from higher-value brands favouring cheaper alternatives.

This could significantly impact the company’s growth and sales volumes. Rising interest rates may also increase the cost of borrowing for the firm, hitting profit margins. 

Despite these challenges, I think it would be silly to ignore the business’s competitive strengths. These include its global distribution network and stable of incredibly valuable, well-known brands. 

As such, while I have been disappointed with the company’s performance recently, I am continuing to hold the stock. I could potentially buy more if the corporation unveils a strategy that I agree with. I think the ULVR share price will continue to languish until the strategy is published. 

Rupert Hargreaves owns Unilever. The Motley Fool UK has recommended GlaxoSmithKline and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Was this article helpful?

YesNo

Was this article helpful?

YesNo

Was this article helpful?

YesNo

Back in the middle of November last year, Rivian Automotive (NASDAQ: RIVN) went public. The IPO price was set at $78, but the Rivian share price jumped 29% on the opening day to hit above $100. In the process it raised over $11bn, and put it firmly on the map as an electric vehicle (EV) challenger to the likes of Tesla and NIO. However, since Christmas, the shares have slumped from $100+ to $68. Is this a bargain buy for me now?

Reasons for the recent fall

Rivian performed well straight off the bat from the IPO as investors were optimistic about the future of EVs. In my opinion, it was also heavily bought as an alternative to the main Nasdaq-listed EV giant – Tesla. Given the share price gains during 2021 of Tesla, Rivian allowed investors to diversify.

Unfortunately, this spike only lasted a short time. Over the course of late December and January so far, there have been numerous reasons for the Rivian share price falling. 

Firstly, growth stocks in general have underperformed due to nervy investor sentiment. Part of this concern is due to the tightening of monetary policy going on in the US. Some banks are forecasting as many as four interest rate hikes from the US this year. Added into the mix was the soaring number of Omicron cases in the US earlier this month. It posted a record of over one million cases in a single day.

With Rivian specifically, the release of quarterly results in December also didn’t help. The company generated a negative gross profit of $82m, so it had no hope of making a net profit for the three months. Expenses were also high at $694m, up 141% on the same period in 2020. I get that the firm is gearing up for mass production, but some investors don’t have a long-term mindset. I think the people who bought the shares for speculative short-term gains would have likely sold, contributing to the downward pressure on the share price.

Finding value in the share price

There’s definitely something to be said about the share price being below the IPO level only two-and-a-half months after it went public. In theory, the investment bankers should have set the value at a fair price in November. In fact, usually the IPO is priced slightly below par, in order to show positive sentiment for the share price to rally on the first day.

Therefore, I don’t think the fundamental Rivian value has decreased by almost 15% ($78 vs $68) over this period. In January, the company announced that over 1,000 vehicles were produced during 2021. The business is still in the process of scaling up production and marketing. It’s hard to pin an estimate on sales and profitability going forward. Yet I think the company is well placed to capitalise on the growing EV market. 

From a long-term value perspective, I do think it’s a good buy right now and am considering buying some shares myself. In the short term I think things could be volatile, but I can ride this out.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

There’s a lot of excitement over the metaverse right now. And I think it’s justified. The mobile market has matured and everyone has some sort of handheld device nowadays. But the augmented reality/virtual reality (AR/VR) market is in its relative infancy. As an investor, this is what excites me the most. Spotting the next trend and looking for the best companies to invest in. This brings me to my search for metaverse stocks that could really explode in the years ahead.

Two of my top picks (outside of Big Tech)

Before I get started, it’s worth mentioning Meta Platforms (previously Facebook). Traditionally part of the US ‘Big Tech’ group of companies, it catapulted the term ‘metaverse’ into the mainstream last year when it rebranded to Meta. The company will now focus considerable resources on its own metaverse, while segregating its family of social media apps into a separate division. I see a lot of potential in Meta and its plans for the metaverse. But here, I want to explore smaller stocks that might not be as well known.

The first company is Unity Software which provides a platform for users to create 3D content across AR/VR and numerous other devices. For example, Unity’s platform was used by Disney to create a short film in VR. It also has a leading game-engine software solution, so I see it really expanding in this vertical too. Analysts are expecting at least 30% revenue growth from Unity in both 2022 and 2023. 

I also view Roblox as an exciting metaverse stock. It’s another platform provider for content creators, only here focusing primarily on games, but also virtual events. Another big brand, Nike, partnered with Roblox to create Nikeland, a 3D theme park where people can play and kit out digital versions of themselves in Nike-branded goods. There’s huge potential for other companies to leverage Roblox’s expertise to bring their brands into the metaverse in my view.

I do have to keep in mind that both of these companies are still loss-making, so it does heighten the risk of the investments.

Picks and shovels metaverse stocks

Investing in single stocks is always going to be risky. The companies have to keep executing for the revenues to keep rolling in. With the metaverse, there’s also going to be intense competition as many businesses attempt to muscle in on this growing industry.

This brings me to a favourite quote of mine from Peter Lynch, the famous fund manager. He describes ‘picks and shovels’ businesses in the following way: “During the gold rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue-jeans (Levi Strauss) made a nice profit.”

So I also think it’s worth mentioning companies like Nvidia, and Taiwan Semiconductor. These businesses either design or manufacture leading computer chips that will be vital in any version of the metaverse. I view them as the ‘picks and shovels’ option to gain exposure to the metaverse in my portfolio.

With all of these investments, I’m going to take a long-term view. Any new industry takes time to develop after all. But over 2022 and beyond, I think these stocks could really explode with the growing metaverse so I’d buy them in my portfolio.

Dan Appleby owns shares of Meta Platforms and Nvidia. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Nike and Unity Software Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It is starting to look as if a stock market crash is brewing. Of course, it is impossible to tell what is just around the corner for equities, so there is no guarantee the market will crash in the short term. However, I have been preparing for uncertainty by acquiring FTSE 100 stocks with growth potential. And with that in mind, here are my favourite shares to buy right now, all of which I would acquire for my portfolio. 

FTSE 100 growth

One of the reasons why investors are starting to move out of equities is rising inflation. Rising prices are forcing central banks to increase interest rates, which is having a negative impact on the outlook for certain businesses. 

But this environment could provide a significant tailwind for the resources sector.

Commodity prices have been surging over the past 12 months. A combination of reduced supply and rising demand has combined to send prices charging higher. It does not look as if this trend will end any time soon. It can take years to design and develop new mining facilities. In the meantime, existing producers can only optimise output as much as possible. 

This is why I would acquire FTSE 100 commodity group Glencore (LSE: GLEN) for my portfolio to provide protection against a stock market crash. The company is the world’s largest commodity trader, and it also produces significant volumes of critical commodities such as copper and coal.

Commodity trading is a relatively unique business. Profit margins are razor-thin, and to make money, companies need a global network of contacts and infrastructure assets. There are only a handful of firms globally that have the global scale and financial resources required to provide the sort of services that Glencore offers. 

As such, with the demand for crucial commodities rising, I think the outlook for the business is better than it has been for many years. Recently, there has also been speculation that the company could be acquired by one of its larger peers. 

Despite the firm’s attractive qualities, there are also some major risks associated with the firm. In the past, Glencore has faced accusations of criminality when acquiring assets. It also has a mixed ESG record. These challenges could hold back the company’s growth and potential in the long run. 

Defensive play for a stock market crash

I believe one of the best ways to protect a portfolio from a stock market crash is to buy corporations with robust business models. This should ensure that even if their share prices fall 50%, these companies should continue to earn a steady income and, hopefully, their prices will recover. 

A great example is FTSE 100 company Admiral (LSE: ADM). Car insurance is a legal requirement in the UK. The company is one of the largest car insurance providers in the country. It also offers a range of other insurance products, including home and pet.

In the event of a stock market crash, it is unlikely that consumers will stop buying mandatory car insurance. I also think it is unlikely consumers will stop purchasing other products such as home insurance, although there may be a slight decline in volumes if people decide to cut spending due to the cost of living crisis. 

The one risk I will be keeping an eye on is on the group’s balance sheet. The company has an extensive investment portfolio, which it uses to help support insurance claims. The value of this portfolio could decline in a stock market crash, although management is using a defensive strategy. Thanks to this strategy, any impact on the portfolio should be relatively modest. 

Still, Admiral is also expanding its business overseas. It has growing divisions across Europe and in the US, which provides a high level of diversification for the enterprise. 

With these qualities, I believe the firm can weather any economic and market uncertainty. That is why I already own the shares in my portfolio and would be happy to buy more. 

Banking shares to buy 

As I noted at the beginning of this article, higher interest rates are one of the reasons why investor sentiment is starting to deteriorate. 

While higher rates will hurt some companies, they could provide a windfall for banking stocks. As such, I would add NatWest (LSE: NWG) to my portfolio. I think this stock could provide some protection against an inflation-driven stock market crash. 

Higher interest rates will enable the enterprise to increase the rates it charges borrowers. The company has already increased interest rates on its mortgage products after the Bank of England hiked rates at the end of last year. 

This should translate into fatter profit margins for the group. As well as this growth, the company has a strong balance sheet. Its capital ratio is nearing 20%, significantly higher than the low-double-digit rate required. 

FTSE 100 shareholder returns 

The combination of rising profits and a strong balance sheet could lead to increasing shareholder returns. There is already speculation that the company could announce a special dividend and more share repurchases when it reports its fourth-quarter results in the next few weeks.

That said, there is no guarantee that the corporation will book higher interest rates. The UK banking market is incredibly competitive, and if NatWest’s peers do not raise rates as well, the lender will be unable to do so without losing business. This is probably the biggest challenge the lender faces right now. 

Despite this risk, I think the outlook for this FTSE 100 company is incredibly encouraging. That is why it is on my list of one of the best shares to buy right now to protect my portfolio in the event of a stock market crash. 

Rupert Hargreaves owns Admiral Group. The Motley Fool UK has recommended Admiral Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.