While a rising tide is supposed to lift all boats, some stocks seem determined to sink despite the market hitting new highs. More than a few of them are likely in real trouble, but some could be ready for a rebound.

We asked three top Motley Fool contributors to come up with a stock that's been battered but now is ready to bounce back. Read on to find out why Kinder Morgan (KMI 0.46%), Gilead Sciences (GILD -0.85%), and Hertz Global Holdings (HTZG.Q) are ready to recover.

Natural gas pipeline and plant

Image source: Getty Images.

Down double digits despite progress and an upcoming catalyst

Matt DiLallo (Kinder Morgan): Natural gas pipeline giant Kinder Morgan has fallen double digits during the past few months -- and nearly 50% over the previous three years -- despite the fact it continues to generate steady cash flow year in and year out. Last quarter, for example, distributable cash flow was $1.2 billion, or roughly flat with the prior year despite lower commodity prices and asset sales. Meanwhile, even with the impact from several significant headwinds, distributable cash flow this year will only be down 7% from its peak in 2015, which shows the overall stability of its business.

As a result of the decline in Kinder Morgan's stock price, shares now trade at a rock-bottom valuation of just 9.6 times distributable cash flow. Not only is that a bargain compared to the low-teens rate it traded at last year, but it's well below the mid-teens average of its peer group. At some point, the market will realize that Kinder Morgan's stock price is too low, which should cause its shares to bounce back.

One potential catalyst for that rebound is the company's plan to release an updated dividend policy later this year. Kinder Morgan told investors late last year that it intended to reinvest the bulk of 2017's cash flow into growth projects while it worked on strategic initiatives to shore its balance sheet and secure outside financing for other expansion projects. With those transactions now complete, the company will be in the position to reallocate a substantial portion of future cash flow toward dividends, with the possibility that it could double the dividend starting next year. Such an announcement could draw income investors back into the stock, with that bullish buying sending its share price higher. 

Test tubes in a lab

Image source: Getty Images.

Waiting for a deal

Keith Speights (Gilead Sciences): "Beaten-down" is an apt way to describe Gilead Sciences stock. The big biotech's share price has dropped more than 40% since July 2015. Gilead is, in many respects, a victim of its own success.

Revenue, earnings, and Gilead's stock price soared following the company's launch of hepatitis C drug Sovaldi in late 2013. Even greater success came with Gilead's introduction of Sovaldi's successor, Harvoni, the next year. Gilead raked in the money as thousands of hepatitis C patients were cured of the disease. 

The problem, though, with selling drugs that cure a disease is that, sooner or later, there won't be as many patients that need your drugs. That's the situation Gilead began to experience in a major way last year. It didn't help that a couple of rivals also entered the market with their own drugs that cured hepatitis C, driving prices down. Gilead's revenue and earnings began to fall -- and so did its stock price.

Is Gilead ready for a rebound? I think so. The stock is now dirt cheap, trading at less than nine times expected earnings. Gilead's HIV drugs continue to do pretty well. The biotech also has a solid pipeline. These factors won't cause Gilead stock to make a comeback anytime soon, though.

Instead, the one thing that could fuel a rebound for Gilead is an acquisition. The biotech's executives have publicly stated that they plan to make one or more deals, possibly this year. There have even been hints that Gilead could be looking to make a big deal, with some speculating that a buyout of Incyte (INCY 0.77%) could be in the cards. If Gilead indeed acquires Incyte or perhaps executes a "string of pearls" strategy of buying multiple smaller biotechs, I think its stock will be poised to roar back.

Couple renting a car

Image source: Getty Images.

Ready to drive again

Rich Duprey (Hertz): Talk about a car wreck. Hertz Global ran off the road a few years ago and lately seems determined to drive the company further into the ditch. The stock has lost 30% of its value in the past month, 60% so far in 2017, and an amazing 83% from its 52-week high. Calling Hertz "beaten-down" is an understatement, but is it ready to bounce back? I think so.

There are a number of reasons Hertz shares have been left up on blocks at the side of the road, including a poorly considered acquisition of budget rival Dollar Thrifty that left it saddled with debt, an aging car fleet filled with vehicles out of sync with consumer demand, and a collapse in used car pricing. And let's not forget the threat posed by ride-sharing services like Uber and Lyft. Many of these headwinds have hit rival Avis, too.

No doubt Hertz hasn't gained traction yet, but its turnaround plan gives it its best shot at doing so, and with its severely depressed stock it has the potential to drive an investor's portfolio forward.

Hertz carries a very heavy $14 billion in debt, but recently said it would make a major $1 billion debt offering of senior second-priority secured notes in an effort to improve its balance sheet. Much of the proceeds will go to redeem existing debt due in 2018 and 2019. It is also changing over its rental fleet faster, dumping compact and standard sedans in favor of more popular SUVs. That's going to take a toll on earnings in the short term -- its first-quarter loss was double what Wall Street was anticipating -- but will position it better later on, though not at least till 2018. It's even partnered with Uber and Lyft to blunt the impact their services are making.

While some think Hertz will be forced into a distressed sale or even succumb to bankruptcy, its new CEO Kathryn Marinello seems to have the chops to pull off the turnaround. She comes from Ares Capital Management and has served on the boards of GM and Volvo.

At just nine times next year's earnings estimates, Hertz stock reflects the very real trouble it finds itself, but it also represents opportunity. It trades at just a fraction of its sales, book value, and the cash it has on hand (though, of course, not forgetting the mountain of debt it has). Hertz Global is definitely down, but I wouldn't count it out yet.