Dear Mr. Berko:

My pharmacist son-in-law likes to research small, unknown stocks that trade below $10 a share and invest in a few hundred shares of each. He has had a few big wins, but over the last decade, I think his many small losses have used up most of his big gains. I’ve never bought any of the stocks he researches, but his last two stock picks, Halcon Resources and Research Frontiers, interest me because I’m an oil geologist — Halcon — and because I know a little bit about the glass business — Research Frontiers. Your opinion would be helpful in helping me make a decision to invest $10,000 in each stock.

D.L., San Antonio

Dear D.L.:

Halcon Resources Corp. (HK-$6.75) is a small, independent oil and gas producer with 190 employees. HK is up from the low of its 52-week trading range ($2.25 to $13.25) due to five very interesting reasons: (1) Its substantial reserves (1.3 billion risk-free barrels of oil) and production potential from its fecund fields in Texas, Louisiana, Oklahoma and Kansas. (2) Its new CEO, Floyd Wilson, recently acquired 3.1 million shares. Wilson has an impressive record of developing energy and production companies, then selling them for a handsome profit. His most recent success was Beta Oil & Gas, which he bought for $60 million in January 2004 and in August 2011 sold to BHP Billiton for $15 billion. (3) Its unusual for T. Rowe Price, Wellington Management, Fidelity, Vanguard, Barron and BlackRock to own large positions of a stock trading at $6 a share. Together they recently reported owning more than 60 million shares, and the private Encap Energy Capital Fund VII reported 3.7 million shares last September. (4) HK is planning on developing more than 1 million acres in its Texas, Oklahoma and Ohio fields, expecting to reach 4.1 million barrels a day. And (5) since 2005, while oil prices were rising, this company lost more than $160 million. However, management believes HK will earn a nickel per share in 2012, 70 cents in 2013 and $1.20 in 2014 and increase its rigs in operation from 13 to 35 next year.

HK has positioned itself to generate impressive reserves and production growth. If oil or gas prices rise due to political problems in Iran or Venezuela or if the U.S. has an unseasonably cold winter, HK’s earnings would benefit enormously and so would the stock price. And if CEO Floyd Wilson’s skills gain more traction, Wall Street’s Financial Mafia may take notice and push HK shares to the low teens. This looks like a fair speculation, and it seems your son-in-law did some sound research.

Research Frontiers Inc. (REFR-$3.55) is a real rinky-dinky $1.5 million revenue company that develops and licenses its suspended particle device (SPD-Smart) light-control technology to other companies to manufacture or market it. REFR’s SPD-Smart chemical emulsion, light-control film is currently used in some windows, skylights and sunroofs with impressive success. The emulsion, light-controlled film is composed of suspended, microscopic light-absorbing nanoparticles infused into the glassmaking process. It creates a unique glass called SPD SmartGlass that smartly increases energy efficiency and user comfort. The technology allows users to instantly change the tint of glass or plastic from clear to dark, or any point in between. This can be done automatically with the touch of a single button. SPD-SmartGlass also blocks 99 percent of ultraviolet radiation, and users control the amount of heat, glare and light that enters their buildings, homes, factories, businesses or cars. REFR has licensed 39 companies to sell the SPD SmartGlass to four major application areas: auto, aerospace, architectural and marine products. And I’m told that Mercedes and BMW may use this product in their 2014 models. REFR has only 19 million shares outstanding and last October sold 1.25 million unregistered shares at $4.70 to an impressed private investor, raising $5.6 million it needs for operating expenses. This sounds good but doesn’t feel right. But if you can afford the risks … do it.