When enough people in a group are vaccinated to provide the unvaccinated population with similar benefits, it's known as "herd immunity." One company that stands to benefit from that principle is Henry Schein (NYSE:HSIC), a major distributor of vaccines. After dismal sales in 2006, the health-care products distributor is betting on a rebound in vaccine sales to help immunize its own stock from getting sick.

To kick off a new year, Henry Schein began pre-booking orders for the 2007 flu season. The company remains confident that it can sell 20 million vaccine doses, more than twice the lower-than-expected 9 million doses it believes it sold in 2006. The increased sales will help Henry Schein meet its targeted diluted earnings per share of $2.51 to $2.57.

That would be a welcome relief, after the company had to lower its 2006 earnings because of the vaccine sales shortfall. Although Henry Schein's medical segment, which includes vaccine sales, represents about 34% of sales, the lower sales volume created a roughly $0.10 drop in earnings per diluted share for the year. And the risks of future shortfalls related to selling vaccines haven't gone away.

Henry Schein's vaccine providers GlaxoSmithKline (NYSE:GSK) and Sanofi-Aventis (NYSE:SNY) must obtain and maintain regulatory approval to manufacture and sell their vaccines. The recent Chiron debacle proves only too well how a disruption could affect Henry Schein. And as mild winter conditions continue, the weather also contributes to the unpredictability of company's sales.

On the bright side, if the earnings guidance for diluted earnings in 2007 is met, the company's stock will look much cheaper than it is today. In addition, Henry Schein's favorable industry dynamics and the company's high returns on invested capital bode well for the health of its stock.

Still, many of these favorable conditions are factored into Henry Schein's current share price. As an investor who appreciates value, I would recommend keeping the company on your watch list until it presents a greater margin of safety.

For related Foolishness:

GlaxoSmithKline is a Motley Fool Income Investor recommendation. Discover our entire list of dynamic dividend payers with a free 30-day trial subscription.

Fool contributor Matthew Crews welcomes your feedback -- really! He has no financial position in any of the companies mentioned. The Motley Fool has a disclosure policy.