Sight reading is a tricky monster for guitarists. Really the best way to get better at it is to read more. With the plethora of free sheet music online, it’s not hard to find music for reading.
The trick of sight reading is look where you’re going, not where you are. That is, look ahead in the music a half beat or a beat. This goes for anything from a chord chart to a classical guitar piece. By the time you reach a note, it’s too late to think about it.
It can also be helpful to play things in many positions. So if something fits well in first position, don’t just leave it there, try it up higher. In real performance or practice however, the easiest or more fluent fingering should be used.