When to buy stock

• PE ratio goes below reasonable levels. (Bluechips generally trade at PE ratio of 25) You can also consider historic PE ratio of stock to make the decision.
• Price to Sales ratio goes below reasonable levels. (Bluechips generally trade at PS ratio of 5) You can also consider historic PS ratio of stock to make the buying decision.
• You also need to look at forecasted EPS and revenue growth of stock. Stock prices follow EPS growth.
• Price chart pattern can be last thing that you can look at when making buying decision.

When to sell stock

Once you know when to buy the stock, it is easy to know when to sell. Just look at PE, PS ratio and EPS/revenue growth of company to make the decision. If EPS is growing at 30% CAGR for last 3 years, it is generally observed that growth slows down and so is the stock price. So if stock has skyrocketed in short period of time, observe the earnings growth and forecast.