The Australian stock market has had a good run over the last couple of months but that has made finding bargains a little bit harder.

Rather than chasing shares that are trading at expensive valuations, it might be wise for some investors (including myself) to take a more conservative approach and wait until prices become more attractive.

Two fast growing companies that I am watching very closely in the hope of a pull back include:

Blackmores Limited (ASX: BKL)

Although Blackmores shares have already fallen significantly after hitting their all time high of $220 per share at the start of this year, I still believe a better entry point will be around the $130-$140 per share level.

There is no doubt that its current year growth will be unmatched by most companies on the ASX, but this doesn’t negate the potential risks the vitamin company could face in the medium term. Blackmores still faces regulatory uncertainty from China, raw material supply concerns and the risk of further competition. Its recent move into the baby formula sector is also being questioned and this has been one of the drags on the share price over recent months.

Despite these concerns, the company is still expected to deliver exceptionally strong earnings growth over the next two years at least. CommSec analysts are forecasting Blackmores to deliver earnings per share (EPS) of $5.28 in FY16 which means the shares are currently trading on a price-to-earnings (P/E) ratio of around 28. In FY17, its EPS is forecast to increase by around 25% to $6.60, placing it on a FY17 P/E of around 22.

These valuations are not excessive assuming Blackmores can meet market expectations, although a slightly lower share price will provide investors with just a little more margin of safety.

Sydney Airport Holdings Ltd (ASX: SYD)

Sydney Airport is my favourite infrastructure company but I would be uncomfortable buying at current levels.

The share price has performed extremely well over the past five years (rising 131% excluding dividends) mainly as a result of two factors.

The first has been Sydney Airport’s underlying financial and operational performance. As the two graphs below highlight, passenger numbers have increased consistently over the last few years driven by strong growth from inbound tourists. This growth in passenger numbers has been directly reflected in the company’s growing profitability.

Source: Company Presentation

Source: Company Presentation

The second factor behind the strength in the share price relates directly to its growing distributions.

In an environment of low interest rates, investors have flocked to Sydney Airport’s reliable dividend. As a result, I believe some investors have priced the shares as if they were bonds causing the shares to become overvalued.

Source: Company Presentation

Source: Company Presentation

As the graph above highlights, Sydney Airport is forecasting 2016 distributions to be 30 cents per share. At the current share price, investors will receive an unfranked yield of 4.2%.

Although this would appear attractive to some income investors, I don’t believe this provides a suitable return for to compensate for the risk of investing in equities. If the shares traded back towards $6 per share, however, I would feel far more comfortable becoming an investor in this high-quality asset.

Blackmores and Sydney Airport are by no means cheap at the moment and that is why I'm taking an interest in this fast growing, dividend paying company instead.

Forget companies cutting dividends like BHP and Rio Tinto when you can get GROWING dividends.

This "dirt cheap" company. is growing like gangbusters, and trading on a fat dividend yield, FULLY FRANKED. With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016. Click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.