Two years ago, at the opening night gala of one of New York’s most glamorous cultural institutions, dinner guests in black-tie dress were horrified to be served risotto as a first course. Innumerable plates of rice went back to the kitchen untouched. What were the caterers thinking? Carbs were out – bring on the steaks!

In retrospect, it wasn’t just the caterers who were clueless about the diet craze – Wall Streeters should have been more on their toes, too.

Reviewing the performance of various food companies over the past few years should have money managers racing to the “women’s magazines” trying to anticipate the newest diet crazes. The Atkins diet, which at its zenith claimed more than one in ten Americans, took a sizeable toll on a number of companies such as Krispy Kreme, Panera Breads, Sara Lee, Interstate Bakeries, American Italian Pasta Company, Kellogg’s, General Mills, and many others.

With many consumers now weaning themselves from the Atkins diet, many of these companies have been staging a rebirth. For some, like Panera Breads (PNRA $56), underlying expansion was so firmly in place that the Atkins effect was little more than a hiccup. For others, like Italian American Pasta Company (PLB $21.46) the shunning of carbs was a disaster.

In the middle, Sara Lee Corporation is rebounding, slowly. The stock (SLE $20.49) has been trading in a narrow range for years. Nonetheless, the vice president at Shields & Company and a highly respected food company analyst, Bob Cummins, rates the stock a strong buy. He is a fan of the company’s management and of their restructuring plan announced in February. The restructuring was necessitated, in part, by the Atkins downdraft.

The changes involve divesting several non-core businesses, including the company’s European apparel and meat operations, and spinning off to shareholders its American apparel line. Mr. Cummins is confident the disposals will generate excellent prices, further strengthening the already-robust balance sheet. He is also optimistic margins will improve on Sara Lee’s remaining lines.

He looks for substantial earnings improvement beginning in the next fiscal year, and considers the stock, selling at 13.5 times the current calendar year estimate of $1.56, a bargain. Another attraction is the stock’s current above-average yield of 3.8%.

Mr. Cummins is also high on General Mills (GIS $46.86), which likewise took a beating from the shunning of cereals and high-carb foods. The company “has bounced back dramatically” according to Mr. Cummins. An analyst with Argus Research, Erin Ashley Smith, agrees. She also recommends General Mills and says the Atkins damage “opened management’s eyes to consumer trends” and consequently sharpened the company’s responsiveness.

So what new trends might the food industry, and Wall Street, be on the lookout for? One is the growing love affair with anything organic.

Mr. Cummins is recommending Dean Foods (DF $35.28), in part because the company has a commanding presence in the organic milk business through its Horizon brand. The line carries extremely high margins and reported sales growth of better than 35% in the most recent period. The stock has been flat over the past year and is selling at about 17 times this year’s projected earnings.

Ms. Smith is also a fan of organic products and says General Mills has been doing well with whole grain cereals and other natural products. She points out that large food companies veer away from ballyhooing their organic divisions, since consumers prefer to think their cheese or milk is coming from some old-fashioned farm in New England, not being processed by a large conglomerate.

Another new fad taking hold is a growing appetite for dark chocolate. This enthusiasm is being fed, in part, by medical alerts about the possible health benefits of chocolate consumption, which most people are all too happy to embrace. The obvious stock play here is Hershey (HSY $61.76), especially since the company is in the process of acquiring a manufacturer of dark chocolate.

Mr. Cummins is a fan of Hershey, but describes the stock as having practically a “cult following.” The issue is perennially expensive – it’s up 33% in the past year and sells at better than 25 times this year’s expected earnings – and appears to have sailed through the Atkins phase virtually unscathed.

What’s new in diets? One innovation is “The Bible Diet” which comes complete with the Good Book, and relies heavily on guidance from above, as well as a steady diet of biblical foods such as fish, fish oils, whole wheat, and figs. We are still looking for a play on the fig market.