The past few years have seen Rolls-Royce (LSE: RR) do so well that many investors reckon they missed the boat. Over five year, Rolls-Royce shares have soared 1,183%.

But not all of that growth came years ago, meaning some more recent investors have been able to profit from this ongoing success story of British industry.

Over the past year, for example, the Rolls-Royce share price has moved up by 24%. So could there still be me to get in now?

Letting your winners run

Sometimes, when a share goes up a lot, there is a temptation to sell it to bank a profit. In fact, that is exactly what I did a few years ago with my Rolls-Royce shares.

I made a handsome profit  — but nowhere near as much as I would have done if I had simply sat on my hands and kept the company in my portfolio until now.

That explains why some investors like to ‘let their winners run’. In other words, rather than selling a share that has already done well, they hang onto it in the hope it will keep going higher.

Such a strategy is not just based on greed. Rather, the idea is that if a company is performing well and its share price has therefore moved up, the ongoing strong performance could get better over time, potentially helping boost the price further.

In fact, I think that is exactly what has happened to Rolls-Royce shares. The company has recovered from a pandemic-era civil aviation demand slump and has a bursting order book. It has benefitted from increased demand in defence and power systems too.   

By cutting costs and taking a more disciplined approach to financial performance, the FTSE 100 aerospace engineer has been able to convert growth at the top line (revenues) into strong growth on the bottom line (profits).

The share could keep moving up

So can things continue as they have been? I think they potentially could. Rolls is clearly on a roll.

That could continue. Indeed, the company has raised its financial guidance for this year. It now expects to deliver £4.7bn-£4.9bn in underlying operating profit and £3.8bn-£4bn free cash flow. That would represent year-on-year growth of 36% and 16% respectively, even at the low end of the projected range.

If the business keeps going from strength to strength, I think Rolls-Royce shares may well move upwards too, even from here.

I’m sitting on my hands

But while I should have sat on my hands a few years ago and not sold (easy to say in hindsight, of course), I will do so now as I do not plan to buy.

There is lots to like and the company benefits from a strong brand, proprietary technology and a large installed base of engines. However, at 49 times earnings, Rolls-Royce shares simply look too expensive to me.

So far the Middle East war has had limited impact on global civil aviation demand. But history shows that civil aviation periodically suffers a dramatic drop in demand in short order, for reasons beyond Rolls’ control. The pandemic was an example.

I do not think the price offers me sufficient margin of safety for such a risk, but fortunately, I see more attractively-priced growth shares elsewhere in the market.              

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Christopher Ruane does not hold any positions in the companies mentioned.