Barron`s:Special Report -WISE BETS ON SMARTER GRID: From Cisco to EnerNOC, many stand to cash in on the modernization of the power grid.

"But gradually adding smart-grid companies to build the green portion of your portfolio is probably a good idea. "Overall, we expect smart-grid companies to show superior earnings growth relative to other clean-tech sub-segments," says Barclays' Shah. "We expect the stocks to trade at a premium valuation.

Steven Milunovich, an analyst at Bank of America Merrill Lynch, calls the smart grid Merrill's "favorite" green-energy sector, because smart-grid companies are less capital-intensive than solar and wind-power companies, and generally deliver higher returns.

Besides, as Canaccord Adams analyst John Quealy notes, smart-grid upgrades in the U.S. and elsewhere are prerequisites to using solar and wind power in the most cost-effective and efficient ways."