Colombia’s economy is growing 4 to 5 percent annually, one of the highest rates in Latin America. And the city of Medellin, once the world’s cocaine capital, is turning into a tourist destination.

A major factor behind the resurgence: Colombian army victories over FARC guerrillas during the past decade. This has opened swaths of countryside to overseas investment. And we think another boost will come when the government finally signs a peace treaty with the FARC.

Peace talks with FARC restarted in 2012, and there have already been several rounds. Although talks failed 10 years ago, indications are that this time around there’s a strong chance of success. If an agreement is reached, FARC would relinquish its guerrilla ways, including dealings in illegal drugs, to become a participant in the country’s political system. This would likely attract many more investors to Colombia, further boosting its outlook.

Given that the Colombian market is down about 7 percent so far this year, we think now’s a good time to take a look two of the country’s largest companies, both of which trade on the NYSE.

Ecopetrol (NYSE: EC). This is the world’s 8th largest oil company in terms of market capitalization. Most of the shares (88 percent) are owned by the government. But Colombia has been hands-off, leaving the business to industry experts using market-based approaches.

Political and military stability is key to continued growth in Colombia’s oil industry. That’s because most of the oil produced in the country passes through six main pipelines, which have been easy targets for FARC guerrillas. However, attacks have become less frequent due to the peace negotiations. And this emerging stability has helped Colombia become one of the top 10 exporters of oil to the US.

Currently, Colombia is one of just five countries globally that’s expanding its oil production. Its proven reserves are 2.3 billion barrels located in six basins, and many oil companies believe these reserves could be vastly increased with proper exploration and mapping.

Down but not out. Ecopetrol shares are down some 20 percent this year, as the company’s production growth has slowed from a previously torrid pace. In the latest quarter, output still managed to rise 6.4 percent to 790,800 barrels of oil daily.

By 2015, Ecopetrol expects to increase its daily output by nearly 20 percent, to at least 1 million barrels. To achieve this, it’s investing close to $10 billion a year, with about half going to boost production.

A huge potential catalyst for Ecopetrol is the recent death of Venezuelan president Hugo Chavez. The post-Chavez government is likely to partner with regional companies to improve the now-degraded efficiency of Venezuela’s oil production. And Ecopetrol is in the running to be one of the first foreign oil companies granted access to Venezuela’s massive oil reserves.

Ecopetrol shares (traded as ADRs in the US) were recently priced at $47, 12 times estimated 2013 earnings.

Bancolombia (NYSE: CIB). Colombia has one of the most stable and well-reserved banking systems in Latin America. And Medellinbased Bancolombia is the country’s biggest bank.

With a market capitalization of just $8 billion, Bancolombia is smaller than most US banks, but it’s a bastion of stability. And it’s expanding within Colombia as well as regionally.

Last year, Bancolombia bought four of HSBC’s (NYSE: HBC) Latin America units for about $400 million in cash, including businesses in Colombia, Peru, Uruguay, Paraguay, with gross assets of over $4 billion. In February 2013, it bought HSBC’s Panama operations for $1.2 billion, its biggest purchase to date.

A regional player. Bancolombia stock is down about 1 percent for the year. There’s concern its new acquisitions will require the bank to raise more capital to meet the Colombian government’s reserve requirements.

Raising capital would likely mean issuing more shares, which would dilute shareholder’s equity and perhaps impact the dividend, which has grown 29 percent annually since 2001.

While Bancolombia’s expansion presents a host of challenges, we think the bank is well-managed, with more-than-adequate capital reserves. And it should post above-average growth as it integrates its latest purchases and continues to cater to Colombia’s growing middle class.

 At a recent price of $66, Bancolombia shares were priced at 14 times 2013 earnings estimates.