Transocean (NYSE: RIG) is the world's largest offshore drilling contractor and a leading provider of drilling management services worldwide. The company owns, or operates, a contract drilling fleet of 138 mobile units, including 39 high-specification floaters, 29 midwater floaters, 10 high-specification jackups and 56 standard jackups. It operates in the world's major offshore oil-producing regions, including the Gulf of Mexico, the North Sea, Canada, the Middle East, Brazil, Africa and Asia. Chevron (NYSE: CVX), BP (NYSE: BP) and Petroleo Brasileiro (NYSE: PBR) are major customers.

The stock has been a steady gainer, since the January market downdraft, advancing on word of solid quarterly results, new and renewed contracts and optimistic analyst remarks. Essentially, a global shortage of deep-water drilling units has established a long-term, favorable pricing environment for the company.

The news has kept RIG shares cycling through a positive, 20-week trading channel. The price is currently rebounding from the base of that channel, suggesting the potential for a rise back toward the top.

Brokers recommend the issue with twelve "strong buys", thirteen "buys", eight "holds" and four "underperforms". Recent price targets are in the $160-$201 range. Analysts see a 29% average annual growth rate, through the next five years. The RIG P/E ratio (9.79), PEG ratio (0.36), Price to Book ratio (3.57), Sales Growth rate (134.19%), EPS Growth rate (50.20%), Return on Assets (10.32%), Return on Investment (18.52%) and Return on Equity (36.46%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 90% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $92.61 and $163.00. A stop-loss of $134.00 looks good here. Note that the firm is expected to report fiscal Q2 results in early August.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.