Think about being under water. No, not swimming under water, but investing in a company that works under water.

That’s Transocean ($114.44) which has already made a big investment splash this year, shooting up about 30% to an all-time high this week. It’s the country’s largest contractor in the offshore drilling market, with 2006 sales of $3.2 billion and a specialist in complex deep-water drilling projects.

It’s still a stock to own. That’s the clear message I get from a couple of crackerjack stock pickers. Not only that, our pickers, a veteran investment adviser, Richard Moroney, and money manager Leonard Mohr, expect Transocean’s stock — based on their projected price targets — to head roughly another 20% and 70% higher, respectively.

The company’s bottom line has been percolating in recent years, rising to $2.93 a share last year from $0.27 in 2004. More of the same sizzle is expected, with Wall Street estimates calling for ballooning profit growth of 166% this year, followed by an impressive 43% gain next year.

Despite these glowing expectations, Transocean sports what’s viewed as a bargain price-earnings multiple of just 12 based on estimated year-ahead earnings of $9.48 a share. That p/e represents a significant discount to its three-year forward average of 18, which is also its industry average.

Mr. Moroney, director of research at the well-regarded Dow Theory Forecasts newsletter in Hammond, Ind., believes the shares of Transocean — which he describes as “a contract driller flush with energy” — could rise about 15% to 20% over the next 12 months. That’s based, he says, on strong fundamentals and its impending $18 billion merger (announced in July) with rival GlobalSantaFe Corp., whose sales last year ran $3.3 billion.

Our other Transocean bull, Mr. Mohr, an active energy investor and a principal of Los Angeles-based MCR Associates, has a much heftier target, $200, over the next three to four years. That suggests the stock, if he’s right — which is a big if — is currently selling at about a 70% discount to his target price.

Much of his enthusiasm centers on Transocean’s impending get-together with GlobalSantaFe, which he describes as “a marriage made in heaven.” Mr. Mohr thinks this transaction, which would give Transocean close to 60% control of the combined entity, will accelerate the company’s growth, as well as effect strong cost savings.

“An investment swim with Transocean makes an awful lot of sense,” he quips. “It will only make a portfolio financially healthier.”

Transocean’s management has already said the economies of scale created by the merger will lead to annual cost reductions of between $100 million and $150 million by 2010.

Mr. Moroney sees other merger pluses. Post merger, he points out, Transocean’s dominant market share should represent a competitive advantage in bidding for contracts. Likewise, he notes, GlobalSantaFe’s extensive fleet of shallow-water rigs, also known as “jackups,” should remedy Transocean’s low penetration of West Africa and Europe.

TransOcean, it should be pointed out, is by no means undiscovered, having nearly doubled from its 52-week low of $66.04 and having risen almost 40% from its 2006 close of $80.89. Still, Mr. Moroney, who has picked a number of winners in this column, among them Garmin, ConocoPhillips, and Lockheed Martin, sees more mileage.

One key reason is the advantage of size. When the Transocean-GlobalSantaFe merger is completed, the combined company will operate a fleet of 146 rigs, about twice the size of its next-largest competitor, and boast a $33 billion backlog of drilling projects. In addition, it’s pointed out, importantly, the deal will broaden Transocean’s customer base and increase its exposure to state-owned national oil companies, which is said to control almost 90% of global oil reserves. Some other pluses cited by Mr. Moroney for owning Transocean:

• Energy companies are increasingly relying on deeper offshore waters, which has led to a tight supply of deep-water vessels. As a result, day rates are soaring and energy producers are willing to sign for longer periods of time at those higher rates.

• Transocean’s average day rates jumped 61% to more than $200,000 in the six months ended in June and should continue to rise in coming quarters.

• Fleet-utilization rates increased to 91% in the June quarter, up from 88% in the year-earlier period.

• High-specification rigs, the most expensive 37 of the company’s fleet, are fully committed though 2008 and 87% booked for 2009.

The bottom line: There’s gold under water. Get your pick and shovel from Transocean and join the drill.

dandordan@aol.com