While I typically focus on emerging markets, given the global scope of this newsletter I occasionally dip into compelling developed market investments.

The commodity complex has taken a beating over the past year, largely thanks to weak global economic growth. Even the historic growth engines of China and Brazil have been sagging.

Consequently, any upside in commodities is worthy of investor attention.

Of all the commodities, natural gas in the United States has become one of the most shunned. Hydraulic fracturing has revolutionized the production of natural gas, vaulting the US ahead of Russia as the leading producer. The resulting glut has wreaked havoc with gas prices.

However, natural gas has been one of the few commodities moving higher so far this year, after a particularly cold winter in many parts of the country spurred consumption. That came even as the number of rigs drilling for gas recently hit an 18-year low, largely due to low prices deterring production. Consequently, the supply of natural gas in storage has been running about 5 percent below the five-year average and about a third lower than last year.

Natural gas prices are actually forecast to rise over the next few quarters, with the consensus estimate calling for prices to reach $4.13 per million British thermal units (MMBtu) by early next year. And yet, sentiment remains extremely negative. A recent survey by Bloomberg showed only 23 percent of respondents were bullish on the commodity.

Even as supply has begun to show signs of tightening, demand has been on the rise. Natural gas has returned to favor for a number of industrial uses, including as feedstock for the production of petrochemicals ranging from fertilizer to plastics.

Dow Chemical (NYSE: DOW) estimates that about $100 billion of new industrial investment is planned in the US to take advantage of the cheap and abundant natural gas made possible by hydraulic fracturing.

As America continues to look for ways to reduce dependence on imported oil, natural gas has become an attractive alternative to gasoline as motor fuel. Several municipalities across the country already use liquefied or compressed natural gas to fuel everything from buses to trash trucks and many more are reportedly considering making the switch.

Most significantly, natural gas is increasingly being used to fuel electricity production.

Utility demand for natural gas can be fickle, depending on weather conditions. The next gas inventory report is likely to show only a 92 billion cubic feet increase due to a mild spring. Nonetheless, power generation currently accounts for a third of US natural gas demand.

Over the past few years, the US Environmental Protection Agency has introduced new regulations cracking down on emissions of mercury and pollutants that are common byproducts of burning coal, the most common feedstock for electric utilities.

Consequently, while converting coal-fired generation capacity to natural gas is an expensive proposition, natural gas is becoming an increasingly popular feedstock for American electricity producers. It is estimated that 90 gigawatts of coal-fired generation capacity will be replaced by natural gas by the end of the next decade.

Plans to begin exporting natural gas in the coming years will likely have the most significant impact on natural gas prices. Analysts at Moody’s Corp (NYSE: MCO) have forecast that the US will have the capacity to export 178.4 billion cubic meters of liquefied natural gas (LNG) per day by 2020, as new export facilities come online over the next several years.

The debate over natural gas exports has become highly politicized, as major industrial users argue that exports will drive up their input prices. However, a recent US Department of Energy report shows that the cost of gas isn’t likely to skyrocket given the constraints of production costs and global demand. But with natural gas prices not far off their all-time lows in the US, any increase in price would be a profitable one for producers.

Natural gas prices are likely to remain volatile for some time to come, but it appears that they are finally breaking to the upside. Even Goldman Sachs (NYSE: GS), which has long been one of the most bearish on the commodity, recently made a bullish buy recommendation.

Given that the shift in sentiment is still in its early stages, this is an attractive entry point for adding a high-quality natural gas producer to our Resources Portfolio.

Cimarex Energy (NYSE: XEC) is one of the most conservatively run natural gas ventures in the US, focusing on solid rates of return, keeping its capital structure simple and eschewing debt.

Of its 2.3 trillion cubic feet of proved energy reserves, 55 percent is natural gas and the remainder is oil. Although Cimarex primarily remains a natural gas player, including oil in the mix allows the company to blend its production to stabilize profits.

Cimarex operates in three principal geographies: mid-continent, encompassing parts of northern Texas, Oklahoma and southern Kansas; the Gulf Coast of Texas; and the Permian formation in western Texas and eastern New Mexico.

More than two-thirds of the company’s reserves are located in the mid-continent region, accounting for slightly more than half of its annual natural gas production. The region is viewed as one of the most cost-effective for energy producers, due to rich reserves and generally flat terrain.

Cimarex has been developing properties in the mid-continent since 2007; at its current rate of extraction, the company estimates that it can continue producing there for another 17 years without adding to its holdings.

Most of the firm’s oil assets are located in the Permian, accounting for 31 percent of its total proven reserves and 42 percent of its annual production. While it has held its acreage in the region since 2005, it has not yet fully developed its plays there. The company estimates that it could increase its production of oil and natural gas there by as much as 60 percent over the next few years.

So far, Cimarex has little meaningful production in the Gulf Coast region, where about 1 percent of proven reserves are located. The company is still conducting exploration work there, with encouraging findings.

Thanks to management’s go-slow approach to developing its properties and its propensity to finance its exploration and production programs with existing cash flows, the company currently has about $900 million in debt for a debt-to-equity ratio of 0.2.

Cimarex doesn’t produce the outsized results of many of its competitors due to its lack of leverage, but it’s one of the lowest cost producers in the business for both natural gas and oil.

Many of the company’s overly ambitious peers have run into trouble because of highly leveraged drilling programs. By contrast, Cimarex has produced better than 17 percent revenue growth over the past three years, with superior returns on both assets and equity.

Analysts have been consistently bumping up earnings forecasts over the past several months for Cimarex and now call for the company to grow earnings by another 25 percent over the next five years.

However, because of bearish sentiment over natural gas, the company’s shares are currently trading at just 11.9 times forward earnings.

With its low production costs for natural gas that now roughly stand at breakeven, Cimarex could easily surpass expectations if natural gas prices conform to the forecast and remain above $4 per MMBtu for the foreseeable future. This company is a solid, conservative play on rising natural gas prices.

I’m adding Cimarex Energy to the Resources sleeve as a buy under 76.