Joe Terranova Provides Investors With An 'Edge' For Mega-Cap Tech Investing In 2022

Alphabet Inc GOOGL GOOG has been the top-performing mega-cap tech stock so far in 2021, trading higher by nearly 70% year-to-date. 

Virtus Investment Partners' Joe Terranova expects Alphabet and the other mega-cap companies focused on returning capital to shareholders to be the winners in 2022.

"Your edge is these mega-cap companies that are committed to return capital to shareholders," Terranova said Monday on CNBC's "Fast Money Halftime Report."

The reason Alphabet made such a dramatic move higher in 2021 is the company "embraced the Apple Inc AAPL model of a share buyback that is beyond Street expectations," according to Terranova.

During the company's most recent earnings report, Alphabet announced it repurchased 4.6 million shares worth about $12.6 billion.

Amazon.com, Inc. AMZN has underperformed the S&P 500 in 2021, trading higher by about 4.5% year-to-date. Terranova suggested the stock's underperformance could be a result of the company's unwillingness to return capital to shareholders via buybacks and dividends. 

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The S&P 500's risk-adjusted return in 2021 was the highest it has been since 1990, he said, adding that those return levels won't continue in 2022.

Terranova told CNBC he plans to continue holding shares of Alphabet, Apple and Microsoft Corporation MSFT in 2022.

"I'm going to be there with Microsoft, I'm going to be there with Alphabet, I'm going to be there with Apple because they're going to do me right in terms of buying back their stock."

GOOGL Price Action: Alphabet (GOOGL) has traded as high as $3,019.33 and as low as $1,696.10 over a 52-week period. The stock was up 0.56% at $2,954.92 Monday afternoon at publication.

Photo: Courtesy of Alphabet.