Undervalued TSX Penny Stocks with Strong Fundamentals to Watch in July 2025

The TSX has long been a treasure trove for investors seeking high-growth opportunities in small-cap stocks. While these companies often fly under the radar, their balance sheets, operational milestones, and market positioning can reveal compelling value. In July 2025, three names stand out: InnoCan Pharma (CVE: INOC), Amerigo Resources (CVE: AMR), and Graphite One (TSX-V: GPH). Each offers a unique blend of resilience, innovation, and strategic momentum, making them worth a closer look for those willing to dig into the details.

InnoCan Pharma: From Operating Losses to Breakthroughs

InnoCan Pharma's Q1 2025 results signal a dramatic turnaround. Revenue rose 15% year-over-year to $7.8 million, driven by its subsidiary BI Sky Global. More impressively, the company transitioned from a $1.2 million operating loss in Q1 2024 to a $0.5 million profit in Q1 2025—a 140% reduction in losses. This shift reflects disciplined cost management and a focus on high-margin segments like its LPT-CBD platform.

Operationally, InnoCan has made strides in global IP protection. A granted patent in India and a divisional application in China for its liposomal CBD formulation position the company to enter lucrative markets. The FDA's recent positive feedback on its non-opioid pain management platform adds credibility, while the sponsor fee waiver for veterinary applications reduces regulatory hurdles.

Balance Sheet Strength: A $1 million debenture raise in March 2025 and a planned $18 million private placement (as of July 2025) provide liquidity for R&D and market expansion. While the auditor still flags “going concern” risks, the company's cash runway has extended beyond one month, a critical improvement.

Investor Takeaway: InnoCan is a speculative play but one with tangible progress. For risk-tolerant investors, the stock's 52-week range of $0.45–$0.90 (as of July 2025) suggests potential for 100%+ gains if the FDA approves its LPT-CBD pipeline.

Amerigo Resources: Copper's Quiet Champion

Amerigo Resources' Q2 2025 report paints a picture of operational excellence. At its Minera Valle Central (MVC) mine in Chile, the company produced 15.5 million pounds of copper and 0.39 million pounds of molybdenum, with 99.0% plant availability and zero lost-time accidents. These metrics underscore its efficiency in a sector prone to volatility.

Financial Discipline: Amerigo's $1.82/lb cash cost in Q2 2025 outperformed its full-year guidance of $1.93/lb, even as copper prices climbed to $4.42/lb (LME average). The company's Capital Return Strategy—returning $7.6 million to shareholders via dividends and buybacks in Q2 alone—has reduced its share count by 14% since 2021, boosting EPS.

Balance Sheet: With $23.3 million in cash and $7.5 million in debt as of June 2025, Amerigo is on track to eliminate debt by year-end. Its $90.2 million in cumulative shareholder returns since 2021 demonstrates a commitment to rewarding investors during a commodity upcycle.

Market Positioning: As a partner to Codelco (the world's largest copper producer), Amerigo benefits from steady tailings supply. With copper prices trending upward and EV demand driving long-term demand, the company is well-positioned to outperform peers.

Investor Takeaway: Amerigo is a safer bet in the TSX's copper sector. Its stock, trading at a P/E of 12x and a dividend yield of 3.5%, offers a blend of growth and income. For those seeking exposure to the copper boom, this is a no-brainer.

Graphite One: The U.S. Battery Supply Chain's Secret Weapon

Graphite One's July 2025 $18 million equity raise at $0.90/share (with warrants to $1.25) marks a pivotal step in its mission to dominate the U.S. battery materials market. The funding will accelerate environmental studies for its Graphite Creek deposit in Alaska and support a $10 million milestone payment under its partnership with Chinese graphite firm Chenyu.

Operational Momentum: Graphite Creek is the largest graphite deposit in the U.S., with a 20-year mine life and projected output of 175,000 tonnes of high-grade concentrate. The company's Feasibility Study, completed 15 months ahead of schedule, highlights a 30% IRR and $6.4B NPV, bolstered by $37.5 million in DPA funding and $325 million in EXIM Bank support.

Strategic Alliances: Graphite One's MINAC initiative with Lucid Group and Capitol Hill allies aims to create a 100% U.S.-based battery supply chain. This aligns with the Inflation Reduction Act's 45X tax credits, which could cut production costs by 30%.

Risks and Rewards: While the graphite market faces oversupply and weak demand, Graphite One's circular economy model (mining, processing, recycling) and government backing differentiate it. Its modular Ohio plant allows phased expansion, reducing capital risk.

Investor Takeaway: Graphite One is a high-risk, high-reward play. At $0.85/share, it trades at a discount to its $1.25 warrant price, offering potential for 50%+ gains if the Graphite Creek project meets milestones. Investors should monitor permitting progress and EV policy shifts.

Conclusion: Balancing Risk and Reward in Small-Cap TSX

The TSX's small-cap sector is a double-edged sword: it rewards those who do their homework but punishes the impatient. InnoCan Pharma offers speculative upside in pharma innovation, Amerigo Resources provides steady cash flows and a strong balance sheet in copper, and Graphite One bets on U.S. energy security.

For investors, the key is diversification. Allocate 5–10% of your portfolio to these names, and set strict stop-loss levels. Monitor quarterly reports, regulatory updates, and commodity price trends. While none of these stocks are “safe,” their fundamentals suggest they're not all-or-nothing gambles either.

In a market where volatility is the norm, the best opportunities often lie in the shadows. July 2025 is shaping up to be a pivotal month for these three TSX stocks—and for investors brave enough to act.