How to let somebody know an overpriced stock from a cheaper one ?
Answers:
every industry and companies inwardly it are new so to truly find undervalue wellbeing, one must do a ton of analysis. If you want the most simplified method, find an industry, look up competitors and compare their PEGs (price returns growth used to ratio). PEG to some extent eliminate a "comparing oranges to apples" problem by adjust P/E ratio to justification for a company's growth, thus allowing one to find "underpriced" stocks in both hurried and slow-growing industries. But as I said, this is of late a simple (and frequently ineffective) track to find "cheap" stocks. A indisputable analysis requires significant amount of work, which is why the foot stock analysts big bucks :)
You cannot, unless you perfom some sort of valuation, i.e. fundamental analysis.
Most individuals will notify you to use P/E but it's not that simple: the fastest growing stocks enjoy complex P/Es than their mediocre peers, and you don't want to buy a loser basically because it appears cheaper.