Stoke reached the semi-finals of the League Cup for the first time since winning the trophy in 1972 with a comfortable 2-0 win over Sheffield Wednesday on Tuesday night.
Smith was in the Stoke side which beat Chelsea 2-1 at Wembley 43 years ago - the Potters' only major silverware since their formation in 1863 - and was at the Britannia Stadium to see them progress into the last four.
"You look at the size of the squad and this is the best squad they've had since the 70s," said Smith, who played almost 500 matches in 14 seasons for Stoke before going on to manage Sunderland and West Brom among others.
"It's a better squad than the 70s because it's got more depth.
"You look at the subs bench and there's internationals there.
"Look at the way they're going forward and they could get into Europe through the league this year, never mind anything else."
Stoke are currently 12th in the Barclays Premier League but only four points off a top-six spot.
Manager Mark Hughes has been credited for introducing a more attractive brand of football since succeeding Tony Pulis in May 2013 and has signed exciting attacking talent in the shape of Bojan Krkic, Xherdan Shaqiri and Ibrahim Afellay, who was among the scorers on Tuesday.
"This is a very well run football club from top to bottom," Smith told BBC Radio Five.
"Whoever Stoke get in the semi-final they (their opponents) won't be happy about it because beating them over two legs is going to be difficult
"It's all about trophies and we (the 1972 side) are still thought of very highly.
"Hopefully I'm still alive when we get the next trophy."
Source : PA
Source: PA