Kathy gave really good instructions, and I also feel that stabilizing the fabric to sew it is key. I'll add a few more tips that I find useful.
Sometimes I just starch the shirt hem and press it dry to gain that stabilization for the sewing.
There's bias knit fusible interfacing that comes on a roll that stabilizes the hem, it works great.
If using a Stretch Twin needle, lessen the upper tension so that the fabric doesn't tunnel as you sew it.
(Or maybe using a blue bobbin case would accomplish the same thing, but I haven't tried it, only in theory it seems like it would work!)
Lightly stretch the hem as you sew it when using a straight stitch because the knit fabric needs to retain that stretchiness,
Otherwise your straight stitches will pop.
Many stitches work well for knits, I sometimes use the # 21 in Utility for knit hems, it's a little bit decorative, #25 is also a good one for knits and looks like the underside of a Cover Hem.