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Why the Dick Smith Holdings Ltd share price skyrocketed 24%

Credit: Sean MacEntee

The Dick Smith Holdings Ltd (ASX: DSH) share price has skyrocketed again today, lifting another 24.3% to 43.5 cents per share.

The share price has risen 55.4% since Monday’s closing price and more than doubled since the shares bottomed out at 20 cents on that same day.

Although those gains might seem impressive, the shares remain considerably below the price they were trading for last week.

Source: Yahoo! Finance

Source: Yahoo! Finance

The company itself is not in a healthy position. It booked a $60 million writedown on inventory on Monday and is now trying to sell millions of dollars of its products at heavily discounted prices.

While shares of rivals like JB Hi-Fi Limited (ASX: JBH) aren’t as cheap as shares of Dick Smith, they’re more expensive for a reason and could well make for a better investment today.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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