The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

By Ian Wyatt

Carlos Slim probably knows more about investing in emerging markets than anyone else alive.

Forbes named him the world's richest man last year. His holdings are currently estimated at $70 billion. His telecommunications investments in Latin American countries have been his best earners to date, but the multibillionaire is not stopping there. When he speaks about investment opportunities in new markets, you should listen.

Late last week, Carlos announced his interest in one Latin-American country overlooked by many investors.

The country he spoke about was not Mexico, or even the super-hot Brazil. Instead, Carlos spoke of the home of Colombian drug lord Pablo Escobar and the Medellin cartel. But his interests aren't in narcotics.

Carlos is investing in Colombia because it has the potential to power the next generation of oil production.

There are many signs that highlight Colombia's turnaround from a hostile environment over the last decade. The first is the country's improving economic and political stability. In the middle of last year, Juan Manuel Santos was sworn in as the new Colombian president, and his new policies have generally been investor-friendly.

Santos succeeds Álvaro Uribe Vélez who was president from 2002 to 2010 and is credited with much of the country's progress fighting illegal armed groups, and promoting commerce.

The government has also used incentives to create an attractive investment environment. According to Bloomberg, Colombian foreign direct investment has increased nearly fivefold in the last decade, from $1.5 billion in 1999 to $7.2 billion in 2009. According to central bank figures, Colombia received $6.5 billion in foreign direct investment through the third quarter of 2010, meaning it is on pace to grow investment for yet another year.

The oil sector is largely driving this investment, in part due to government programs to make the country attractive to foreign oil companies. Companies can now have longer exploration licenses, and can also own 100 percent stakes in oil ventures.

The chart below from the EIA Country Energy Profiles shows the increase in oil production in Colombia in recent years.

In a recent Bloomberg interview, Slim stated, "The Colombian government is actively looking at the development of the oil industry and is promoting other investments."

The Central Bank expects the Colombian economy to grow 4.5 percent in 2011, after growing an estimated 3.7 to 4.1 percent last year.

Slim also noted that rising commodity prices from a recovering global economy will help Colombia's future economic growth. As emerging markets like China and India require more resources for their expanding middle classes, commodity prices will rise and will favor oil-producing countries like Colombia.

There are not a lot of Colombian companies trading on U.S. exchanges, but there is a broad-based measure of the country's equity performance. The chart below shows the performance of the Global X/InterBolsa FTSE Colombia 20 ETF ( GXG), which is designed to measure Colombia's equity market performance by replicating the FTSE Colombia 20 index, an index that represents the performance of the 20 largest and most liquid companies in Colombia.

The ETF is up over 180 percent in the last two years.

Recent concerns regarding inflation in emerging markets has caused a sell-off in many emerging economies, and Colombia hasn't escaped unscathed. But the long-term growth trends are intact, and a pullback like this has opened the door for investors that haven't yet had the opportunity to increase exposure.

There is one company that trades on U.S. exchanges that is a direct play on Colombia's oil sector.

Houston American Energy Corporation ( HUSA) focuses on exploring and producing crude oil and natural gas off the shores of Texas and Louisiana, as well as Colombia. It is a small-cap stock with a market capitalization of $482 million.

Investment analyst firm Canaccord Genuity started coverage on HUSA earlier this month, initiating with a "speculative buy" rating on the stock.

The chart below shows the stock's performance over the last year, and the recent performance mirrors the pullback in the more broad-based GXG.

For investors that want more direct investment opportunities you'll have to look to the Canadian exchanges in Toronto and Vancouver. These exchanges offer direct access to many foreign filers because of Canada's rich history as a center for resource investment.

Petroamerica Oil ( PTA.V) focuses on exploring and acquiring oil and gas properties in South America. The Calgary-based company currently holds interest in 1.8 million acres in Colombia, and should benefit from the strengthening of the country's oil sector.

The company is extremely small with a market capitalization of only $221 million, and the stock trades on light volume. The chart below shows the stock's performance over the past year.

These are just a few stocks that I like to play the strength of the Colombian oil sector. As the country continues to attract foreign investment to fuel an expanding oil industry, I see the Colombian economy performing very well over the next few years.

I recently completed a special report that focuses on top oil and gas prospects in emerging markets throughout the world. If you're interested, you can look at this report by taking a risk free trial to Small Cap Investor PRO. Our top gains on currently open positions are 227 percent, 131 percent, and 105 percent.

Until Tomorrow,

Ian Wyatt, editor of

Disclosure: none
Wyatt Investment Research, founded in 2001 as a publisher of newsletters, offers independent investment research of financial markets, stocks, bonds, ETFs and mutual funds to about 250,000 individual investors. The company is led by founder Ian Wyatt, who serves as publisher and chief investment strategist.

If you liked this article you might like

Check Out These 3 Gems in the Punishing Emerging-Market Landscape

Check Out These 3 Gems in the Punishing Emerging-Market Landscape

Colombia Banking on Textiles, Tourism as Oil Prices Slump

Colombia Banking on Textiles, Tourism as Oil Prices Slump

Shares Of GXG Now Oversold

Shares Of GXG Now Oversold

Now Might Be the Time to Invest in Colombia

Now Might Be the Time to Invest in Colombia

Starbucks Exec Discusses Colombia Expansion Plan

Starbucks Exec Discusses Colombia Expansion Plan