(FORTUNE Magazine) – On a recent episode of Sex and the City, Miranda, the red-haired single mother, steps up to a bookstore cashier with a diet tome. She has baby fat to lose and, like 71% of American dieters, is about to go the self-help route. The cashier stops her: "Weight Watchers," she says, "is the only sane way to go." Cut to her next scene, where Miranda signs up.

Hang on! Weight Watchers on Sex and the City? Yup, writers on the show were so taken with the chain they gave it a free plug. And that's just the latest indication that the 40-year-old company started by a hefty New York housewife is having a resurgence--and becoming a surprisingly good business.

Weight Watchers, which used to be owned by Heinz, was part of a leveraged buyout by a European investment firm in 1999. The outfit went public in late 2001; the stock has shot from $24 to $43 since. With more than a million dieters meeting each week, and attendance growing in double digits each quarter, analysts forecast 20% to 25% EPS growth for each of the next five years. "They have a large and growing target market," says Merrill Lynch analyst Carol Wilke (no pun intended).

What's behind Weight Watchers' success? First, under CEO Linda Huett's guidance, the company has backed off its Heinz-era strategy of hawking prepared foods, instead promoting its popular "points" system, which lets dieters eat anything, provided they stay within a given range. "It allows you to go out to dinner with friends and be a normal person," says Marion Nestle, who heads nutrition and food studies at NYU.

Second, the plan is affordable: According to UBS Warburg, it costs $12 to lose a pound on Weight Watchers, compared with $45 for Nutri/System and $50 for Jenny Craig. Almost 70% of Weight Watchers' $624 million in revenues comes from member fees (typically a $20 initiation, which is often waived, then around $10 to $15 for each weekly meeting). Another 27% comes from a mix of snacks, cookbooks, and diet calculators.

Finally, the company's lean organizational structure makes for fairly fat profit margins, currently 19%. Of the more than 34,000 employees, 98% are part-time, which keeps a lid on costs. And the weekly meetings both here and overseas are typically held in inexpensively rented local facilities such as churches.

Weight Watchers has one problem: men. Given the Oprah-esque nature of the meetings ("Why should I let [HMOs] hurt my body?" asked one dieter recently), a full 95% of clients are women. The company is now test-marketing an Internet strategy aimed at men. In the meantime, relying on repeat business is a good bet: The average member returns four times over the course of her life.