Amazon Expands PBS Shows on Prime Instant Video

Today, Amazon.com (NASDAQ: AMZN  ) said it has signed a multiyear deal with PBS to add hundreds of additional PBS episodes to its Amazon Prime online streaming service. 

Amazon will add episodes from shows like NOVA, Masterpiece, and Ken Burns documentaries, as well as kids shows Caillou, Arthur, Daniels Tiger's Neighborhood, Dinosaur Train, and Wild Kratts.

In a press release, Amazon's director of digital video content acquisition, Brad Beale, said, "This deal is exciting for Prime members and particularly for those with families -- this new deal combined with the recently announced Viacom deal brings some of the most popular kids programming to Prime Instant Video, making it the perfect place for the whole family to catch up on all their favorites." 

Jason Seiken, general manager of PBS Digital, said, "Giving viewers access to our library of past programs through digital platforms like Prime Instant Video complements our broadcast service and is an important part of our strategy to reach new audiences."

The deal comes after PBS and Amazon worked out an arrangement back in January for Amazon to become the exclusive video subscription service for all current and future seasons of Downton Abbey.

Amazon Prime Instant Video has more than 41,000 movies and TV episodes available to users with a Prime membership -- which includes free two-day shipping from Amazon's website, unlimited video streaming, and access to the Kindle lending library for $79 per year.

A 13.7% Yield Safe Enough For An 89-Year-Old Mother

I don't often follow pure income vehicles, but this is as good an opportunity as I've come across. In fact, it's "safe" enough for an 89-year-old mom. And it's IRA-friendly -- you can hold it in a retirement account. I think it will prove a great way to put some capital to work in our current ultra-low interest rate environment.

VOC Energy Trust (NYSE: VOC) went public in May 2011 at $21 per share. It has an interest in 881 producing wells in Texas and Kansas. VOC pays the costs of operating and drilling wells. VOC Partners, the sponsoring company, gets 20% of the net income from the wells. The remaining 80% goes to the trust, which pays it out to shareholders. (Come tax time, shareholders receive a 1099 -- not a K-1, thankfully. This makes VOC a good holding for a retirement account.)

 

For a while, things went swimmingly and VOC paid handsome distributions. Then in October 2012, VOC announced it had drilled a bad well. The stock crashed. The well cost VOC $2.6 million. With no offsetting revenues, the distribution also fell.

So instead of getting 56 cents and 44 cents per share, as shareholders did in the prior two quarters of 2011, they got 46 cents and 26 cents per share.

With the bad well behind it and the costs absorbed, the distribution rebounded. On May 15, VOC paid out 48 cents per share, up from 26 cents in the previous quarter. The stock rallied to $14.40 but quickly settled back down.

Recent weeks have seen the price hover around $13 and change. Your window to act is brief, as it's been going on up again...

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Even if the distribution stayed at 48 cents per share, that would mean $1.92 per share for this year. At $14 per share, that's a yield of 13.7%. Such a yield in this market will not last long. To yield 10%, the stock would have to get to $19.20 per share -- or a 30% increase from today's price. So you have room for capital appreciation as well as distributions.

The trust terminates in 2030 or when the trust has received payment for 8.5 million barrels of oil. Through 2012, it has received payment on only 1.2 million barrels. Either way, there is a long time to go yet.

The trust also produces some natural gas, but oil is the key driver.

Expenses run about $23 per barrel of oil produced. This is on the high side of trusts ($10 to $12 being more typical), but plenty low enough such that even if oil declines somewhat, it should not be a disaster.

There are two main risks.

First, there is the risk of drilling another bad well. Such an event would again entail costs incurred with no revenue. And it would certainly lead to another (temporary) cut as the trust absorbs the costs. There is no ! way to know this ahead of time and it is a risk you would have to accept.

The sponsor, VOC Partners, owns 25% of the stock and has a 20% interest in the profits. So it has plenty of incentive to do well by the trust. It is an experienced outfit that has been around for 30 years.

The bigger risk is simply the price of oil. If oil prices crater, then this won't work out. It should not be a disaster because the trust will still produce cash and yield even at lower oil prices. The trust also hedged 45% of its production through June 2014 at $100 per barrel. That provides some protection against lower oil prices and brings stability to cash flow.

Conversely, the oil price might be an upside kicker. If oil prices climb then so will the distribution. As with the chance of drilling another bad well, I have no idea where the price of oil might go. It is another risk you would have to accept in the deal.

I got turned on to VOC Energy Trust by a money manager friend at a respected value-investor shop. He has spent a lot of time around oil and gas companies. And he bought VOC Energy Trust for his 89-year-old mom. That's a pretty good endorsement.

If you choose to buy it, use a limit order. I'd pay no more than $14.75 per share to give yourself a 13% yield and plenty of room for upside.

P.S. - For the yield-hungry out there, I have a favorite socked away in what I call the "coffee can portfolio." The approach beats just about every other method of investing -- and is good if you're a little lazy. Check out the five stocks here.

Why Earnings Aren't the Whole Story for Kansas City Southern

Kansas City Southern (NYSE: KSU  ) will release its quarterly report on Friday, with the stock having risen to levels it hasn't seen since it spun off its interest in Janus Capital back in 2000. But as much as healthy conditions in the railroad industry have helped Kansas City Southern earnings, there's another potential elephant in the room that's also contributing to investors' interest in the stock.

Kansas City Southern is a relative baby in the railroad industry, with several of its larger peers having five to 10 times as much revenue as the regional carrier. But the railroad's size gives it some important strategic advantages over its peers as well, including the prospects for larger competitors to use a takeover bid to expand their own rail networks. Let's take an early look at what's been happening with Kansas City Southern over the past quarter and what we're likely to see in its quarterly report.

Stats on Kansas City Southern

Analyst EPS Estimate	$0.95
Change From Year-Ago EPS	11.8%
Revenue Estimate	$576.97 million
Change From Year-Ago Revenue	5.8%
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

What in store for Kansas City Southern earnings this quarter?
Analysts have reduced their views on Kansas City Southern earnings in recent months, reducing estimates for the June quarter by $0.03 per share and full-year 2013 calls by $0.04 per share. That hasn't stopped the stock, though, as it's added 6% gains since mid-April.

Recently, we've seen the railroad industry adapt to changing conditions, as old mainstays like coal shipments have given way to poor pricing environments and demanded reactions from railroads to keep volumes up. Earlier today, CSX (NYSE: CSX  ) said that it believes that the trend toward increased rail transport of crude oil from hard to reach areas like the Bakken is likely to continue, even with domestic crude prices getting more expensive compared to world oil prices and even in light of a recent train derailment in Quebec, which involved a crude-oil explosion. In its quarterly report Tuesday night, CSX posted reasonable gains of about 4.5% in net income on a 2% revenue jump, beating expectations but reining in any exuberance about its potential for accelerating earnings growth.

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For its part, Kansas City Southern has also taken steps to take advantage of the trend toward moving oil and food toward the eastern part of the country, with plans to invest more than half a billion dollars in capital expenditures in order to make necessary improvements. Even with crude-oil growth of 350% last year, the railroad still has plenty of potential to ramp up shipments much further this year and beyond.

Another benefit for Kansas City Southern has come from strength in the auto sector, which has helped both it and larger rival Union Pacific (NYSE: UNP  ) produce growth in past quarters. Auto sales have surged lately, and so increasing volumes of vehicles could help offset weakness in coal and other struggling commodities.

Yet arguably the biggest upside potential Kansas City Southern has is as a potential takeover target. Ever since the Berkshire Hathaway purchase of Burlington Northern, railroads have been on the radar screen as buyout candidates. The challenge, though, is that a Union Pacific bid would probably raise antitrust concerns, while for smaller companies like CSX, Kansas City Southern would be a pretty big bite to swallow. Nevertheless, as long as industry conditions remain good, expect takeover speculation to continue.

In Kansas City Southern's earnings report, watch for the current status of the company's continuing moves toward greater diversity of transported goods. If it can keep on top of trends, Kansas City Southern has plenty of room to grow.

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FDA Approves 2 St. Jude Heart Devices

The Food and Drug Administration has approved St. Jude Medical's (NYSE: STJ  ) new Ellipse implantable cardioverter defibrillator (ICD) and its Assura cardiac resynchronization therapy defibrillator (CRT-D), high-voltage devices with new safety features.

According to St. Jude's press release yesterday, the products are designed to promote effectiveness in providing electronic shock therapy while reducing safety risks.

The approvals come as St. Jude's cardiovascular rhythm management (CRM) division, which includes these and similar devices, has faced significant sales pressure. St. Jude's CRM revenue fell by around 6% last year.

St. Jude's U.S. approvals come after the company received European CE Mark approval for the Ellipse and Assura last year. The Ellipse and other ICDs are designed to treat abnormal heart rates, while Assura and other CRT-Ds are designed to manage irregularities in the beating of the heart's lower chambers. Both conditions, if untreated, can lead to potentially fatal outcomes such as sudden cardiac death and heart failure.

The company promises increased safety with the new devices. Dr. Eric S. Fain, president of St. Jude's Implantable Electronics Systems Division, was quoted as saying, "St. Jude Medical strives to deliver the highest levels of patient safety. The new Ellipse ICD and SJM Assura family of devices support those efforts by providing added features that ensure effective therapy delivery."

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Does the 2014 Corvette Stingray Live Up to the Hype?

A historic look at the Corvette Lineup. Photo: General Motors.

Only a few special vehicles can reach the legendary status of an iconic American muscle car. Those special rides give the brand what is called a "halo" vehicle -- a unique ride that draws consumers to the dealership. Because of the attention those vehicles garner, they mean much more to the brands than the sales they produce.

In that elite group are muscle cars such as Ford's  (NYSE: F  ) Shelby Mustang and General Motors' (NYSE: GM  ) Chevy Camaro and Corvette. There's been a lot of hype surrounding the redesigned 2014 Chevy Corvette, but does it live up to the lofty expectations? More importantly, is GM screwing it up by not allowing every dealership to have its halo vehicle? Here are the details, and what it means for consumers as well as GM investors.

Expectations and overview
"The convertible has been a part of the heart and soul of Corvette since the very beginning in 1953," said Ed Welburn, GM vice president of global design. "With the all-new Corvette Stingray, we designed and developed the coupe and convertible simultaneously. As a result, the Corvette Stingray offers an open-top driving experience with no compromise in performance, technology, or design."

As Welburn mentioned, there's no sacrifice in performance, as the 2014 Corvette stingray is estimated to put out 450 horsepower and 610 newton meters of torque. If you're comparing, that makes it the most powerful standard Corvette in its long history.

All the horsepower is produced by the Corvette's 6.2L V8 engine, and its advanced combustion system obviously commands enough raw power and torque to embarrass any tricked-out Honda Civic rolling around your neighborhood. On top of embarrassing Fast and Furious wannabes, what's even better about this generation of Corvette is the interior design.

While the outside of the Corvette has always screamed for attention with its aggressive styling, the interior design left much to be desired. With years of complaints from consumers and critics alike, Chevy designers finally placed the bulk of their attention on the interior issues. Consumers can rest assured that the interior is much improved. The interior offers carbon fiber and aluminum trims with hand-wrapped leather.

Interior of the 2014 Corvette. Photo: General Motors.

You can see the dual 8-inch infotainment screens that feature the Chevrolet "MyLink" system. The interior also boasts a nine-speaker Bose audio system that's typically found in luxury models. Here are some of the other features for standard models, not including premium options.

Seating with lightweight magnesium frames for exceptional support, and eight-way power adjustment. A five-position Drive Mode Selector that tailors up to 12 vehicle attributes. A new seven-speed manual transmission with "Active Rev Matching." A carbon fiber hood on all models, and a carbon fiber removable roof panel on coupes. Advanced high-intensity discharge (HID) and light-emitting diode (LED) lighting. Keyless access with push-button start. Power tilt/telescope steering wheel.

While those features aren't necessarily anything to write home about, the premium features listed on the Corvette website are impressive -- you just have to pay up for them.

"The 2014 Corvette Stingray perfectly embodies Chevrolet's mission to deliver more than expected for our customers," said Chris Perry, vice president, Chevrolet marketing. "The Corvette Stingray delivers a combination of performance, design, and technology that very few manufacturers can match, and none can even come close for $52,000."

Investing takeaway
Ultimately, this is the most complete, powerful, and aggressive styled Corvette in history -- offering a big bang for your buck. That said, will it be enough to salvage the drastic decline in sales?

Data from Automotive News Data Center.

Only time will tell if the sales rebound, but I'm skeptical that the much-hyped 2014 Corvette will do anything for GM's top or bottom lines. Moreover, there is a big hiccup in the plans for GM's halo car: Not all the dealerships are getting the vehicle. What's the point of a halo car if you can't have one sitting at every dealership to draw in consumer traffic?

Chevy has a list of requirements for dealers to meet before receiving the Corvette's, and only about one-third of dealers are going to qualify when sales begin in the third quarter, according to Edmunds.com. After nearly a year, and jumping through hoops of buying special tools and additional training, the rest of the dealers should be eligible to sell the flashy ride -- but it won't be without many ruffled feathers and tested dealer relations.

The seventh-generation Corvette is a unique specimen, to be sure, as well as a powerful iconic ride. It's not enough for me to move past a test-drive, if it's even available at a location near me. What about you? If the newly designed Corvette going to be parked in your garage, tell me why in the comments below. I'm curious.

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