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Henry Schein (NASDAQ:HSIC) is the world's number one distributor of healthcare products to doctors, dentists, veterinary practices plus technical and laboratory services. They serve more than 550,000 customers in the Untied States, Canada and Europe offering over 90,000 SKUs through both direct sales and via catalogues.

Schein's results have been stellar over the past decade with revenues tripling and EPS growing from $0.72 in 1998 to an estimated $2.95 for the year ending this month. Long-term debt was just 12% of capital as of September 27, 2008.

Here are the per share results since 2000 (as reported by Value Line):

Year ….... Rev .…... C/F …... EPS …..... B/V ….. Avg. P/E

2000 ….. 28.43 …. 1.24 ….. 0.84 ….… 6.91 …... 11.1x

2001 ….. 29.97 …. 1.44 ….. 1.01 ….… 7.97 …... 17.6x

2002 ….. 32.07 …. 1.66 ….. 1.31 ……. 9.78 …... 17.8x

2003 ….. 38.32 …. 2.02 ….. 1.55 ……11.47 ……16.9x

2004 ….. 46.86 …. 2.17 ….. 1.53 ……12.76 ...….21.9x

2005 ….. 53.23 …. 2.56 ….. 1.82 ……14.12 ……22.0x

2006 ….. 58.23 …. 2.80 ….. 2.04 …....16.62 ……23.5x

2007 ….. 66.07 …. 3.45 ….. 2.58 ……19.87 ……21.6x

2008* … 74.80 …. 3.95 ….. 2.95 ……22.60 ……16.3x

2008 figures include current consensus estimates for Q4.

At the present quote of $33.68, these shares trade for around 11.4x this year's and 10.2x next year's consensus estimate of $3.30/share. Buyers of Schein in 2000 (the last time it traded with a valuation as low as today) saw their shares surge from a (split-adjusted) $6.00 to $28.90 over the next 30 months.

In fact, Value Line notes that HSIC ranks in the top 1% of all issues in its 1700 stock universe over the past decade in "Price Growth Persistence" and in the top 5% in both "Stock Price Stability" and Earnings Predictability".

The 10-year median P/E has been 20x looking backward and Value Line is assuming a 19 multiple for its three – five year projections. I'm using a more conservative 16x next year's projection to arrive at a 12 – 15 month target price of $52.80/share. That would bring a 56% rise on these high-quality shares.

Is that reasonable? HSIC peaked at $54.10 in 2006 on EPS of $2.04 and hit $63.40 and $63.60 in 2007 and 2008 respectively. With sales, cash flow, earnings and book value all higher than ever before I see no reason that my goal price will not be achieved.

Disclosure: Author owns shares of HSIC and is short HSIC 2010 $40 puts.

Source: Taking a Shine to (Henry) Schein, Inc.