Fuel cell stocks as a group provided investors with some of the market's best performances last year. For example, Bloom Energy (NYSE:BE) soared 284% while shares of FuelCell Energy (NASDAQ:FCEL) shot up 345% and Plug Power (NASDAQ:PLUG)gained 973%. 

The upward trajectories of these stocks have hardly slowed in the new year. In January, Bloom Energy rose 22% while FuelCell Energy and Plug Power both climbed by 86%. Investors unfamiliar with these names might initially suspect that their recent climbs were related to Reddit. That wasn't the case, though -- there were a number of more rational factors in play.

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Behind the Bloom Energy boom

There was no company-specific news to account for Bloom's rise last month. In all likelihood, investors gravitated toward its shares based on the fact that President Joe Biden has consistently espoused policy positions favorable to renewable energy -- something he illustrated by announcing the United States was rejoining the Paris Agreement on climate change last month on the day of his inauguration. Similarly, when Democrats secured a working majority in the U.S. Senate after the Georgia runoff elections, this also likely encouraged investors since it made it significantly more likely that Congress will be able to pass legislation that promotes the use of green energy options.

Focusing on the factors behind FuelCell Energy's rise

For FuelCell Energy, the same external catalysts that propelled Bloom upward were part of the story. But in its case, investors were also responding to a strong fourth-quarter and full-year earnings report. FuelCell Energy booked revenue of $71 million for 2020, up 17% from 2019. And while the company is still unprofitable, its loss from operations narrowed from $67 million in 2019 to $39 million in 2020.

Another encouraging sign motivating investors came in the form of an insider buying more company stock. On Jan. 25, CEO Jason Few bought 11,000 shares at about $18 each for a total transaction value of approximately $200,000. While insiders may choose to sell stock for many reasons, it's highly unlikely that they would choose to buy shares based on any other premise than a belief that the stock price is likely to head higher.

A potpourri of things pushed Plug Power to pop

Plug Power, too, benefited somewhat from political tailwinds last month. But that was hardly all. On Jan. 6, it announced that it had inked an agreement with SK Group, The South Korean conglomerate will acquire about 51 million shares of Plug Power for $1.5 billion. Though the company has been unable to generate cash organically, this transaction clearly signaled to investors that Plug Power will be able to more than keep the lights on for the foreseeable future.

News of another noteworthy deal came less than a week later when Plug Power announced that it signed a memorandum of agreement with Groupe Renault: The two companies will form a 50-50 joint venture that will leverage Plug Power's fuel cell expertise for incorporation in Renault's vehicles. According to the press release, the joint venture will introduce the fuel-cell-powered light commercial vehicles in Europe this year with pilot fleet deployments.

Further encouragement for investors to pick up shares of Plug Power came from several Wall Street analysts who offered up bullish views on the stock. H.C. Wainwright, for example, is clearly keen on Plug Power. At the beginning of the month, the firm's analyst, Amit Dayal, raised his price target from $30 to $60. Then, a week later, he raised it again to $85, according to Thefly.com. Taking similar optimistic stances, Craig-Hallum and B. Riley Securities raised their price targets to $79 from $60 and $52, respectively.

The final take on these familiar fuel cell stocks

Investors' appetite for fuel cell stocks shows little sign of waning. It's critical for prospective buyers of these stocks to recognize, however, that despite the spate of positive news, these companies have consistently reported net losses, and have been unable to generate positive cash flow. Consequently, these stocks should only be purchased by investors with ample tolerance for risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.