The post-Brexit rebound of global equity markets, including the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO), has surprised many investors and it looks as though investors who were sitting on the sidelines have now come to the party.
Few shares have missed out on the rally and a number of high-flying shares have made new all-time highs over the past week or so.
Three blue-chip shares that have really caught my attention include:
Ramsay Health Care Limited (ASX: RHC)
I believe Ramsay Health Care is the best healthcare stock on the ASX and its recent share price performance would leave very few shareholders disappointed. The shares of the private hospital operator have managed to add around 12% post-Brexit, even though the company has not released any updates to the market.
Investors have clearly been drawn to the defensive qualities of the business and to a company that is expected to deliver strong growth for many years to come.
With that said, I am getting a little nervous about that company's current valuation. The shares are now trading at more than 32x earnings and, while I wouldn't consider selling if I was a shareholder, I probably wouldn't rush out to buy the shares either.
REA Group Limited (ASX: REA)
REA Group is another one of my favourite shares although its valuation is also beginning to look a little stretched. The shares have managed to gain just over 14% in the past five weeks and this means the shares are now trading on a price-to-earnings ratio that is approaching 40.
There is a lot to like about REA Group especially because of its dominant market position in Australia and growing international business, but this now appears to be priced into the current valuation and I would suggest investors wait for a pull-back before jumping in.
The caveat to this, however, is if residential listing in Australia's capital cities begins to increase. Listing volumes have been very low by historical measures over the past two years, and although REA Group has been able to successfully combat this, a rise in listings will create a huge tailwind for the company.
Sydney Airport Holdings Ltd (ASX: SYD)
Sydney Airport is often considered the best infrastructure stock on the ASX and this is hard to argue against when you consider its share price and underlying business performance over the past few years.
Only yesterday, the company announced its full year FY16 passenger numbers that showed year-on-year growth of 6.7% or an increase of more than 1.2 million passengers.
On top of the impressive growth being delivered by Sydney Airport, investors have flocked to the stock in an environment of low interest rates and volatile equity markets. Unfortunately for new investors, this means the shares are far less attractive today and currently offer an unfranked dividend yield of under 4%.
Although I expect the share price to remain well supported while interest rates are depressed, I don't think there is a great enough margin of safety to become a shareholder today and I would wait for a pull-back before buying.
