Cherry Picking The Diamonds From The Stock Market

How do you recognize if a stock is undervalued or overvalued?

How do you know?

The value of a stock is really its trading price at any given moment.
That is supply and demand i.e. if it is being traded at $1 and people are buying it then that is its value. If the demand for more shares increases and the supply of those shares stays stable the value/price will increase.
What you want to know is will the demand for that stock increase.
If a company is seeking investment it will offer shares the price will fluctuate based on the demand for those shares. The demand for those shares will be driven by the “faith” the investors have in the future profitability of that company. You can not know if they will make a profit. You can look at their history, and you can consider whether the product they produce will be in demand and whether they can supple it at a profitable price.