Looking for a Financial ETF?Which do you prefer HCAL or HMAX?

 Both HCAL and HMAX are fairly new ETFs.All of their assets are connected to the Canadian big 6 banks and a few large insurance companies.But their connection to them is quite different.HMAX is a covered call ETF while HCAL purchases varying amounts of the underlying assets.

 HMAX is Newer

HMAX has only been around since 2010.And it has got a fairly new and modern investment strategy.It puts 30-50% of it's investment funds into covered calls.This means that the fund sells it's stock as an option and picks up the premium on it's stock as income.But only 30-50% of it's shares become a written option.This gives HMAX more income and it has  a quite high dividend.For example, the present dividend  is 13.59% when 6% is considered a good,healthy dividendWhile it's annual return is a modest 25.90%.It's a juggling act.

  Covered call ETFs is a fairly new instrument.But they are becoming more popular.As the money obtained from the option boosts their income as well as their dividend.Consequently covered call ETFs have a dividend usually quite larger than an ordinary ETF.However the stock price on the portion which has a written option is constrained by the premium on the covered call.Only the unconstrained part of the ETF is able to get the growth in the value of the stock.It is up to the investor to find out what percentage of the ETF is tied down with a written option.Some ETFs reduce potential growth in order to increase income available for dividends.

HCAL has an excellent Performance in 2025

 HCAL uses 100%  of it's funds to buy the underlying assets.And all of these assets are either from the BIG 6 Canadian banks or very large insurance companies like Manulife.As the underlying assets go up in value, the value of HCAL  goes up.Last year HCAL had an annual return of 45%(including dividends).Considerably better than that earned by HMAX.And HCAL has had a recent surge as the Q2 financial reports were,on average, better than expected. but not by as much.And yet the surge has also brought HMAX up in value.

    Going Forward

 It seems logical that the performance in the second half of 2025 should be the same as in  the first half.But the rather stellar performance of HCAL came as a result of the robust performance of primarily 2 banks,namely the TD Bank and the Royal Bank.Although BMO,Scotiabank and CIBC contributed also.It appears to this blog that the business cycle is winding down gradually and the banks will be affected albeit only slightly.For example,Statistics Canada which this blog considers quite reliable forecasts economic growth in Q3 and Q4 at 1 to 2% and then gradually moves up to higher growth rates in 2026.                                                                                                                                       The drop in momentum may shave the earnings especially of the two big gainers -TD and Royal Bank.However look for earnings to drop for all 6 banks and this to cut into the growth of HCAL.While HMAX will have less of a drop and may use income from it's covered calls to raise it's substantial dividend.This will act to raise the price of HMAX which at present is about half the price of HCAL.In summary,both will perform well but it is likely that HMAX  will show greater positive changes.HMAX will fall less or maybe show a slight gain in Q3and Q4.HCAL could easily show a robust loss in Q3and .But in Q1 2026 or maybe Q2, HCAL will put forward bigger gains on the table. 

Zacks Investment Research: Stock Research, Analysis, & Recommendations;Yahoo Finance - Stock Market Live, Quotes, Business & Finance News

 

Dale Mcintyre is a freelance writer who writes primarily for Zacks and Yahoo Finance.

e

Financial Derivatives -a Different kind of new financial Parameter

 The parameter changes examined  have been connected to resources such as lithium,oil and uranium.The parameter changes have usually resulted in an increase in value of the resource.Often this is because the changes have highlighted new uses leading to increased demand.Likewise a financial derivative can create a new usage for an asset.As a true financial derivative is an asset whose value is dependent on the performance or price of an underlying asset.Actually a financial derivative is not another asset;it is a contract.A contract  taken by an option to buy or sell an underlying stock at a contracted price.But here a derivative is taken in a more general way.It is a second asset (an ETF) that moves in the same direction as the underlying asset but not by the same amount nor even the same percentage..ETFs have not been around for very long and certainly have not been popular with investors for very long at all.But it is an excellent way to reduce investor risk.As an ETF or exchange traded fund contain varying amounts of 15-20 individual stocks.This reduces risk instead of putting all the investor's funds into one stock.
     Some Interesting Banking ETFs.

  ETFs were introduced in 1993.But have only been popular for the last 20 years.At first the fund manager acted as a passive trader. As 15-20 stocks were purchased and never traded.They were called mutual funds.However they had a place with investors that wanted to diversify investor risk..But newer funds  took a more active approach.The manager purchased the original 15-20 stocks and as one or two fell out of favour they were replaced by other stocks that were performing better.Thus bringing up the ETFs total return.This is called active trading and it raised the interest of investors..And active trading  volumes started to grow exponentially.Also mutual funds and ETFs have had a large and dynamic impact on the stock market.For example,in some sectors the market value of ETFs is a very substantial percentage of total market value of the sector.This means that movement by a large number of ETFs in one direction can possibly change the direction of the sector.Here this blog picks as attractive ETFs ones  such as ZEB, XFN,CIC,and,RBANK,

  One sector that has been significantly affected by ETFs is the financial sector.This blog believes that all of the biggest ETFs have a substantial financial component;the top 5 ETFs have a market value over $500 million.In addition,the TSX contains an ETF that holds all the companies  and ETFs listed on the TSX ,MX(Montreal) and other exchanges.It does not own the earnings from these companies but gains from the performance of the  overall index of the exchanges.This ETF is one of a kind;it is the TMX group  and has  for its symbol the letter X.Its earnings come from the new financings of stocks and ETFs that want to enter one of their Exchanges.This then is a different kind of  financial derivative.

This is a different kind of financial derivative.But it most certainly gets it's value from the underlying assets.TMX has been listed on the TSX since 2003 when  the stock price was in the $1 area .And it's market value has grown consistently since then.This blog calculated that the market value was  less than $1 billion in 2003 and now the market cap is roughly $16 billion.So X (the TMX Group) has been tremenduously successful  .Every month sees new listings and that means increased revenues from services and exchange fees.In conclusion, an investor,through the TMX Group, can invest in the future success of the TSX and a few other exchanges.This is a definite change in the financial parameters. of the TSX.And it has rewarded investors since 2003.

The change in parameters.

These financial parameters and the earlier mentionned resource parameters all act to increase the return of investors in the TSX.All make the underlying asset more attractive to investors.In fact,these changed parameters have allowed the exchange P/E ratio to climb higher.So the expected price is higher given a certain level of company earnings.This benefits the institutional investor as well as the retail investor when he sells.

Yahoo Finance - Stock Market Live, Quotes, Business & Finance News;MarketBeat: Stock Market News and Research Tools

Dale McIntyre is a freelance writer that writes blogs  for brokers such as Marketbeat.com and Yahoo Finance       

       


 

New Uranium Parameters

    Uranium was first discovered  in Ontario in 1953.This was the Elliot Lake Mines in Elliot Lake, Ontario, owned by Denison Mines.But since then uranium prices were consistently depressed over the past several decades.Now however parameters have changed.For example,the price of uranium in 1953 was $3.00 a pound.Now the price is about $91 per pound.This was because of the tremenduous run-up in price in the last 3 years.But the uses for uranium have increased also creating more demand for the product.Uranium is mainly used for electric power generation.But it is also used for medical isotopes and electric vehicles

   As the price for gas-fired transportation increases,small increases in the price of electric vehicles  still make them  seem relatively cheap.Although the price per barrel of oil has stalled recently this blog sees the price of oil back on trend by late 2025.If so then this leaves a gap in the demand for gas-fired vehicles. This gap will be filled by electric vehicles.And so total demand for electric power will increase.Just as in the picture below. And this will be another factor increasing the demand for uranium.

    On the other hand,most investors have really little awareness of how important nuclear energy is in the production of electricity.In 2024 nuclear energy provided 20% of  U.S.  electrical requirements.Coal  provided as much electrical power but  nuclear energy and natural gas provided the most power at about 32% of   electrical power  in U.S.A. This blog sees enviromentalists putting more pressure on the production of coal and it gradually becoming less important .However it's share could easily be taken up by uranium.As the price of uranium shows little price increases in the short run while natural gas moves closer to the $4.00/boe.This blog predicts that the demand for uranium- produced electric power will increase and the demand for natural-gas produced will falter.

      Supply of Uranium

 It is commonly known that the biggest ore body of uranium is the Macarthur River mine in northern Saskatchewan.But the second biggest deposit is the Denison mine complex in Wheeler River in Saskatchewan.Denison also has some properties in Ontario.These reserves plus a few smaller deposits in U.S.A. ensure that nuclear energy will be relatively cheap for a long time. 20 years ago it was thought that a nuclear plant could only endure for 20 years but now it is expected to last for 80-100 years - a substantial change in parameters.But it is not known how long the original fuel can produce power without some kind of enrichment cost. Still the cost per kilowatt hour is coming down not upwards.

  Over a number of years the  cost of nuclear energy will be cheaper than providing electricity from natural gas.This blog expects that the price of natural gas will move up substantially even in 2025.While the replacement  and enrichment of  nuclear fuel in the plant will be cheaper than replacing the original fuel.And a new competitor for the production of electricity will be renewable energy such as wind turbines and solar power.Over a 10 year period renewable energy may be slightly cheaper but it is not as  reliable .  Wind patterns and solar patterns shift up and down and may not reliably meet customer needs all the time.Consequently customers may insist on nuclear energy as backup because it is so reliable.

        The Foremost Deal -A New Parameter      

   In 2024 and early 2025 Denison showed little sales and little revenues.So management searched for a new deal to revitalize DML.Management found a small lithium and uranium explorer listed on the Nasdaq.It promised Foremost (the new American miner) that it could have 70% of 10 non-core properties in exchange for a 20% stake in Foremost Technology .The deal closed and DML has even bought more shares.Although not abundantly clear it appears like it's biggest mines on the Wheeler river are not touched by this deal.And if DML buys the next option it will be the dominant shareholder in Foremost.Recently more analysts have been keenly watching the new DML.And they are expecting a very good quarter coming up for Denison.Some are forecasting that the stock price will move to $3.50-$3.75.And most forecasts are looking for the price of uranium to move up in the 2025-2029 period.One reason for the price increase is the increase in demand due to uranium used for the electric grid for electric vehicles.And this will only grow in the near future. 

    Denison has certainly added to it's market valuation through it's acquisition of Foremost Technology.Foremost has added also - by owning 70% of 10 fairly substantial uranium mines.Although it must be remembered that these are non-core properties for Denison..DML still owns 95% of the successful Pheonix ,McClean Lake and Cigar Lake mines.And now DML owns about 20% of Foremost Technology.This is part of the reason why several analysts see a good second quarter for Denison Mines.

 Several analysts have predicted a $3.49-$3.75 price tag for DML in Q2.This seems a little high given it's present price but $3.00-$3.25 seems to be a realistic target.And if the price of oil continues to rise then electric vehicle production will increase and more electricity will be needed in the electric vehicle grid. 

   Yahoo Finance - Stock Market Live, Quotes, Business & Finance News;Zacks Investment Research: Stock Research, Analysis, & Recommendations

 
             

..

                                                                                                                                                                                 DaleMcintyre is a freelance writer of business blogs.He writes for Yahoo Finance and   Zacks Research and a few others.                                                                                                                                                                                    

Same plan but new operational Parameters - Data Communications Management

 Data  Communications Management (DCM) is a stock this blog has followed for several years now,Since then it has made several acquisitions and has gained from each one.But the stock price did not move in unison with these acquisitions.The last acquisition was Moore Corp.(MCC) and the stock price surprisingly enough moved down from the $3.00 area to it's  present level.DCM could have made only superficial changes and gotten only superficial gains from MCC.But DCM decided to change the MCC parameters.DCM stated at the time of acquisition that it expected 30-35% gains from the synergies made between the two companies.This blog sees that this will eventually be true but at the present time DCM has spent a considerable amount of money modernizing MCC.Although it has already shut down several MCC buildings that are no longer necessary for the combined operation.The new operation is quite a streamlined one now.

        Q1 Results

      In  Q1 most of the financial indicators  were higher than in Q1 2024.Net income was $5.1 million versus only $1.5 million in Q1 2024. Adjusted EBITDA was $18.6 million versus $18.1 million in Q1 2024.And a special dividend of $.20 was instituted in order to show shareholders that management has confidence in their performance as well as their resultsAnd. that they can manage this fairly large expenditure.DCM  also will pay it's second regular dividend of $.025 per share.By far the main fact that the report revealed is that e.p.s. went from $.03 per share in Q1 2024 to $.09 per share in Q1 2025.This blog feels that DCM is on track to hit $.40-$.50 earnings per share on an annual basis.                                                  

      Is Zavy savy? 

   This blog believes that DCM should expand it's exposure to their digital operation.With that in mind several recommendations have been made to acquire a small American digital printing and transcribing operator called VQS Solutions.It's market value has dropped substantially over the last year but it's technology is "top of the line."In addition,VQS has gotten substantial  new attention and buyers so that it has moved up 35% in the last month.VQS aqppears to have a new suitor.This is unfortunate as there is no doubt that there would be synergies here between DCM and VQS.                                                                But DCM had other ideas.Instead it acquired a small New Zealand software company called Zavy.But it appears that Zavy is working independently from DCM.First this blog suggests that more money be invested into Zavy.This blog suggests that  money be spent on labour and equipment so that the operational scope of Zavy increases.It can do quality work for their own customers as well as do problem solving for DCM customers.This could help automatize DCM operations.And should DCM acquire VQS Solutions down the road changes could be made to Zavy to make it fit together with the newly acquired VQS.

Annual  Guidance 

  Normally DCM only gives general guidance for revenues and earnings for the entire year.However they can give specific guidance for the next quarter.Most analysts believed that annual revenues would come in around $520 million and e.p.s. of $.55.However it has been reduced to $495 million and $.45 per share.This blog believes that revenues may get to $500 million  but e.p.s. should stay at $.45-$.47 per share.Also there is no doubt that Zavy will have to be overhauled to fit into DCM operations

   By the fall of 2025 Data Communications Management should be trading around $5.It is true that DCM took longer than expected to streamline their acquisition Moore Corp.It also appears that they spent more money than planned to fit Moore operations with DCM operations.However now much of the combining has been finished and DCM is ready to gain the profits from this acquisition.The overall plan has not changed and DCM is ready to move forwards.Data Communications is having trouble staying above $2.00 but a little more positive news should send it on it's next step towards $5.00.

         Dale Mcintyre (M.A.(Econ)) is a freelance writer that works for a number of financial brokers.    www.marketbeat.com ;https://finance.yahoo.com/

                                                                                                                                                           

A whole new parameter - lithium production.

America wanted to make a deal with Ukraine for basically 5 critical elements in exchange for a half trillion US dollars.The five elements are titanium,lithium,graphite,nickel and cobalt.One of these 5 was the increasingly in demand element, lithium.Lithium,according to this blog will be more,not less,in demand at least until 2030.The increase in demand will chiefly come from electric vehicles but also from cell phones and renewable energy transmission.Most analysts and most studies show that U.S.A. has quite low reserves of lithium.Several analysts peg the total reserves at only 750,000 tons.Although it is true that some esoteric studies have shown American deposits of several million tons.It has not been substantiated.

Estimates are that the annual American requirements of lithium are about 500,000 tons  for electric vehicles alone.This blog believes that another 100,00-200,000 tons could be required for these other uses.

Imports of lithium

At the present time U.S.A. has to satisfy it's lithium needs by imports from primarily 3 exporters.The 3 exporters are Chile,Argentina and Australia.Canada exports a meagre $194 million, mostly to the growing American market.However Chile,the second biggest exporter exported much more.Although information on Chile exports are hard to get  some estimates are that Chile exported from $10 to $14 billion of lithium to the American market.However Chile  is in the process of nationalizing the lithium industry and this complication may create a chance to increase Canada's share.As often nationalized companies are difficult to deal with and may be very sticky with their prices. And because of it's closeness to American market, Canada may well be able to increase it''s market share at the expense of the other 3(Chile, Argentina and Australia) who export to the American market from a considerable distance.        

Status of Canadian producers

The Canadian lithium industry is presently quite fragmented.12 to 18 months ago there were only 3 lithium mines in Quebec.Now there are 12 to 18 mines in Quebec of various sizes and the largest of these  (North American Lithium)exported  the entire $120-$140 million of total Canadian exports in 2024. Much of it went to France.But recently NAL has discovered 3 other mines near their main NAL mine.This complex is now called the Abitibi hub and there is the potential to increase production significantly.                                                                     There are also 3 or 4 mines in Manitoba but they produce very little and mostly to meet local demand for lithium.However as has been written in my blog on January 11 in Wordpress (Econothon) there has been a new 100 million ton mine discovered in Yellowknife (NWT).But at present it is still being developped as  there is no production yet from this mine  north and east of the Manitoba mines.This blog sees that lithium could be trucked down the Demeter highway in convoys to the American market relatively cheap.But there is no doubt that the present owner LYFT Power. needs outside investment Someone like Brookfield Resources or more likely another miner such as Tech Resources or Hudson Bay Minerals would be beneficial to both parties.There would be a substantial cost in order to start production but at the time of writing lithium sells for $21800 USD per metric ton and up to $65,000 per metric ton for battery grade metal  and it has been higher.

The NAL mine in Quebec is owned by a company called Sayona Mining and it could become a nice acquisition for one of the large gold miners in Quebec.

https://www.zacks.com/;Yahoo Finance - Stock Market Live, Quotes, Business & Finance News

 Dale  Mcintyre (M.A. (Economics) is a freelance writer that writes for several financial brokers including Zacks and Yahoo Finance

Changing the Parameters

 For several years now I have been writing blogs on 8 websites,4 on Wordpress,2 on Google Blogger,1 on Linkedin,and 1 on Tumblr.They all had a business slant to them.But in fact most of the blogs have focussed on some change in the environment that has not been factored into the valuation of a company or in some cases several companies.My blogs rarely just gave a different business forecast for the same factors or situation as other analysts.An example of this is seen in the price of Canadian oil companies.I made several blogs discussing the fact that the size of oil reservoirs has been overestimated.Oil pools increase in viscosity as you go deeper in the reservoir.And in fact at the bottom of the reservoir is a layer of tar or asphalt.Slightly above the bottom layer is one or more layers that are difficult to pump to the surface and to refine.Once this fact is realized and discounted, the estimate of total oil supply will be reduced. And since the demand is constant or slightly increasing, the price of oil will inevitably rise over time.So it is likely that all Canadian oil companies is now or soon will be a bargain.

   The above analysis is only an example of the kind of situations that I described in my past blogs.There are other examples such as the size of the gold deposit in the Australian mine called the Fosterville mine in the state of Victoria in Australia.But it is increasingly difficult to find situations where the value of resources has not been factored into the market price of the resource and of course the underlying stock.So for this reason and other difficulties I have decided to increase the scope of all 8 blogs.I,especially realize,that I have not utilized as much as I should have from  my Tumblr website which I usually make smaller blogs on.

    The kind of thing that I  will focus on are changes in trends or in the environment that will change (at first gradually) the valuation of a company and eventually the price of it's shares.It is rare to find large and clear changes.But I cannot make blogs continuously on large changes.I am content to find small changes on very valuable resources.This can still lead to fairly large changes in the value of a company and it's share price.In the past I looked almost exclusively on the change (especially the increase) in the share price of a stock.But the new blogs will look at other changes also;not only whether a share price will move up and by how much.                                                                                                                   An example of this is the discovery that the long awaited Trans Mountain pipeline is open and transporting oil to the B.C.coast.This allows Canadian oil to be exported to Asian countries like Japan and South Korea.Here the price is the Brent price rather than the W.T.I. index and as a result the Canadian index(C.W.S.) has been rising faster than the W.T.I. which it is tied  together with.The result is that the differential between the American index (W.T.I.) and the Canadian Crude index(C.W.S.) is narrowing.This will benefit all Canadian oil production,not just oil exported to U.S.A. As the percentage of oil exported to Asia increases the differential between the W.T.I.  and the C.W.S.will dissipate.          

It is examples of changes in the environmental parameters like the ones above that this blog is searching for. It will not be able to tell always which  company or stock will  have the biggest gains but it will likely point out which stocks will  gain from this change in the environment.The hard part will be noticing  whether the environmental change is large or small and whether it will be temporary or long lasting.That is the new focus of this blog.

Dale Mcintyre (M.A.Econ) has made all the contributions to Workathon Blogger.Dale Mcintyre is a freelance writer that writes primarily for Yahoo Finance and Zacks Research.

https://www.zacks.com/;https://www.otpp.com/en-ca/

Exchange Income Fund (EIF) was a high flyer for the Last 4 months

December 18,2024 

 

Exchange Income Fund (EIF) has an unusual name that doesn't give shareholders much of an idea what the company actually does.But shareholders and investors realize that 6 months ago it traded at $45/share and now at $57/share (for a 28% increase until Dec.1).This has garnered more interest by investors in what EIF does.EIF is a small aerospace and manufacturing company with a market cap of  $2.75 billion..It is an acquisition oriented operation and has been in business for more than 20years. It  has continuously grown and diversisifed tremenduously.In October 2023 it acquired Dry Air Manufacturing.In addition,on November 13,2024 it closed the acquisition of a Florida based company called Spartan Mats.It was a cash and stock deal wort$120 million.EIF management expects the deal to be immediately accretive to earnings.

Q3 Report

Exchange Income Fund had a very good Q3.For instance it achieved record revenues  of $710 million,adjusted EBITDA of $193 million and adjusted net earnings went from $1.19 per share in Q3 2023 to $1.29 per share in 2024.They also secured a contract for fixed wing aircraft in Newfoundland.EIF management has been very busy in Q3. 

                                    
                                 

                   Q4 and Beyond

    EIF is involved in aviation,aerospace and manufacturing.But about 3 quarters of the revenues come from aviation and aerospace.That's because it owns 6 or 7 small airlines such as Calm Air and Perimeter Air.These airlines serve passenger and cargo traffic largely in western Canada and the north.Traffic should be considered steady rather than liable to have large seasonal increases in revenues.Yet EIF management is working hard on getting contracts to increase the profitability of the aviation side.For example,their new fixed-wing contract in Newfoundland. will be served by their existing business.This would seem to be a good fit.As this blog believes that there is unused capacity in all of their airlines.And there is the possibility of new business in areas such as Nunavut, Labrador and Newfoundland. In effect,the aviation side has been and will be fuelling the growth in the manufacturing branch.However over the last 3 years it is the manufacturing arm that is increasing due to acquisitions.This blog believes that there is still the possibility of one or two small tuck in acquisitions or 1 medium -sized  acquisition on the manufacturing side of business.But it is clear that the steady increases in revenues and earnings will come from the 6 or 7 airlines it owns.

        A Target Price

     First it must be said that EIF should think about changing it's name to a one more connected to what it does.For example,Industrial Development Co. or Northern Innovation Co.Secondly it needs to spend more on marketing it's air passenger and cargo business so as to increase the capacity of it's airlines.Having said that,this blog believes that there will be increases in revenues and earnings from it's recent acquisitions as it works to enhance synergies.Consequently this blog is expecting Q4 net  adjusted earnings of $1.15-$1.35.On an annual basis this would be $3.40 -$3.65 per share.At today's share price the P/E ratio would be about 15 times.With perhaps a forward P/E  of  13 to 14 times.This is a solid and conservative P/E ratio.This blog believes that the P/E ratio could eventually move to the 15-16 times range as investors see the possibilty for growth here.However ,as stated in the title, EIF has moved up from $45 since August.So  investors have already "baked in" some of the impact of the new acquisitions.This blog believes that there still is some price appreciation left.So the target price will be in the $56-$62 area until Q1 2025.As  Q4 has already been accounted for.

Dale Mcintyre is a consulting economist that writes blogs primarily for Yahoo Finance and Marketbeat.     

 https://www.marketbeat.com/ https://finance.yahoo.com/