Like most boss levels, timing is the essential key.
3-stars score is fairly low, so it's easy for three stars.
Wait for the submarine to near the top, then fire the first Red up into the bottom anchor, so as to push it into the gravitational field and on to the ship causing damage. Now fling Bomb up and around so he cuts the ropes holding up the boulders. Timing is the key, as you want the Bomb and the boulders to land on the submarine. This should be enough to cause it to sink.