The stage is set for the World Series, but the investing world is watching its own baseball game, where only the railroad companies seem able to hit off this new star pitcher with the creepy name: global economic downturn. With runners on second and third, and no outs in the inning, could this turn into a grand slam quarter for the major railroad stocks?

Following a lead-off single by competitor CSX (NYSE:CSX), rail operator Norfolk Southern (NYSE:NSC) connected for an easy double in the latest quarter with a 35% increase in net earnings over the prior-year period. Though Norfolk's lean operating ratio of 69.1% is but a long-term target for CSX, both companies logged substantial contributions from the coal transport segments to offset continued weakness from housing and automotive freight.

Norfolk has enjoyed expanding pricing power in each of the first three quarters of 2008, reaching a 24% year-over-year improvement for the latest quarter. Not surprisingly, the red-hot coal sector accounted for a substantial portion of that improvement, as the company generated 43% more revenue per carload of coal than it did in Q3 2007. Following a 50% correction in the price of oil, I wouldn't be surprised to see pricing power for the railroads stabilizing or diminishing a bit as trucking for some freight categories becomes a cost-effective option once more. Coal, however, is rail freight by default, and I see its export market thriving for some time.

Mirroring CSX, coal now accounts for 30% of Norfolk's operating revenue. In case last week's jaw-dropping 1,000% earnings increase posted by Peabody Energy (NYSE:BTU) wasn't convincing enough, perhaps next week's results from its domestic spin-off Patriot Coal (NYSE:PCX) will finally establish that coal has been drastically oversold. Patriot shares have tumbled more than 80% from their midsummer high, while those of competitor CONSOL Energy (NYSE:CNX) are off by 76%.

In the meantime, we have two more rail companies reporting later this week: Burlington Northern Santa Fe (NYSE:BNI) and Canadian National Railway (NYSE:CNI). This Fool will be watching with baited breath to see if these railroads can combine for a grand slam as the World Series gets under way. I'm not suggesting the railroads are immune to the impacts of a global downturn by any means, but I do think the potential resiliency of global demand for coal could certainly cushion the blow. Play ball!

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