Right now, Stocks and Shares ISA investors are scrambling to top up their accounts before the 5 April ISA deadline. Many are also researching the best stocks and funds to buy with fresh capital.

Is Rolls-Royce (LSE: RR.) a good pick for an ISA in 2026? Let’s take a look at the set-up for this popular stock as we approach the ISA deadline.

Five reasons to be bullish

Looking at Rolls-Royce, I can see at least five big positives from an investment perspective. One is that business performance is extremely strong thanks to the company’s transformation plan. Last month, the company posted £3.5bn in operating profit for 2025 versus £2.4bn a year earlier, and said it’s targeting £4bn-£4.2bn this year.

Another is that the company has three different long-term growth drivers (which reduces risk a little). These are a rise in defence spending (NATO’s ramping up its spending to 5% of GDP), the nuclear energy boom, and the continued growth of the civil aviation industry.

A third positive is that the shares are in a long-term upward trend. Generally speaking, it’s much easier to make money on a rising stock than a falling one.

A fourth is that they’ve pulled back a little recently, offering investors an entry point around 15% below their all-time highs. So they’re not as expensive as they were.

Finally, there’s the fact that brokers remain very bullish on the shares and are increasing their price targets (several brokers are now looking for 1,500p or higher). This kind of activity can push a stock higher.

Exploring the negatives

Of course, every stock has its negatives, and I see a few of these here too. For me, the biggest negative is the high valuation – currently the forward-looking price-to-earnings (P/E) ratio’s about 33. That earnings multiple doesn’t leave much room for error.

Another issue is uncertainty related to oil prices. If oil stays high, airlines could make changes to their routes to conserve fuel, potentially impacting the number of ‘flying hours’ Rolls-Royce can charge for engine servicing.

There’s also the fact that the shares are up 700% in three years and about 1,750% since October 2022. Looking at the chart, it’s parabolic and that scares me (because we could see significant profit-taking at some point).

Finally, the dividend yield here’s very low. Currently, it’s only around 1%, so investors aren’t going to pick up much income from the stock.

My view

Putting this all together, I’d consider holding on to them if I was an owner already. I think they’ll probably go higher in the years ahead.

However, if I didn’t yet own, I’d consider holding off buying for now and focusing on other opportunities in the market (of which there are many). I reckon there may be better buying opportunities in the months ahead.

But what do my colleagues think about Rolls-Royce?